Editorial: Mega deal

Air India’s deal to purchase 470 aircraft from Boeing and Airbus comes as a testimony to India’s growing economic muscle

Hyderabad: It is not often that one gets to witness an American president and British Prime Minister together praising in glorious terms a business deal struck by an Indian company and stating how it would generate massive employment in their respective countries. Air India’s mega deal to purchase 470 aircraft from Boeing and Airbus, worth tens of billions of dollars, has generated a huge buzz in the civil aviation sector and comes as a testimony to India’s growing economic muscle and confirms its position on the global high table. In the biggest deal ever struck by a single airline, Air India, now part of the Tata Group, announced its plans to buy 220 passenger jets from Boeing and 250 from Airbus. The deal, announced by Prime Minister Narendra Modi and the presidents of France and the United States, Emmanuel Macron and Joe Biden, respectively, represents a key moment in India’s aviation sector, particularly in the wake of the recent turbulence caused by the pandemic and further exacerbated by rising fuel costs and slim profit margins. The significance of the biggest order for passenger aircraft in history goes far beyond Air India and Indian aviation. It has the potential to boost flagging western economies and sends a vital diplomatic message. It also marks a milestone in the Tata Group’s expansion plans and can potentially alter patterns of traffic in India’s skies. The Air India agreement also has major downstream implications, especially in manufacturing and technology sectors.

Major western economies are now in the middle of an economic slowdown and are desperately looking to spur economic activity and support employment. After irking the West by ramping up its purchase of Russian crude oil, it is good optics for India to be seen as creating jobs in Europe and the US through this mega order. The message seems to be that India and Indian companies are open to business with the world, irrespective of the region and geopolitics. Another significance is that the deal signals AI’s aim to take back a significant chunk of the international traffic from operators in the Gulf; any attempt to build a competing international hub in India will stimulate the aviation industry and generate thousands of jobs. In an under-served sector, where some experts estimate that around 2,000 aircraft will be needed over the next 15 years to serve a growing population from smaller towns and non-metro airports, this represents tremendous potential for growth, especially in manufacturing jobs. Hailing the agreement between Air India and Boeing as a ‘historic’ deal, Joe Biden said it will provide “over one million American jobs across 44 states” while British PM Rishi Sunak said the Airbus-Air India deal would generate employment opportunities around the UK. Ever since taking over Air India last year, the Tata Group has been on an expansion drive.

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