Airbus and India's IndiGo Strike Biggest 500-Plane Deal Yet

Holiday Inn and Holiday Inn Express brands, together making up nearly 70% of InterContinental Hotels Group (IHG)’s portfolio in India, are going to remain the “driver of growth” in the market, said the company’s South West Asia Managing Director, Sudeep Jain.

Only 25% of Indians traveling abroad purchase travel insurance well in advance while making travel arrangements, while the majority of them wait until the last three days to buy it, according to data compiled by insurance aggregator Policybazaar.

Hotel occupancy and room rates have bounced back to pre-pandemic numbers, primarily due to the soaring demand for the G20 Summitto be held in New Delhi on September 9 to 10. 

Clearly Vinod Kannan, the CEO of Vistara, may have had to field this question on the possible Vistara-Air India merger one too many times.

Airbus plans to deepen its industrial presence in India, Chief Executive Guillaume Faury said on Wednesday after meeting the country’s prime minister.

Air India is close to placing landmark orders for as many as 500 jetliners worth tens of billions of dollars from both Airbus and Boeing as it carves out an ambitious renaissance under the Tata Group conglomerate, industry sources said on Sunday.

Air India has sealed a jumbo deal for about 500 new planes worth more than $100 billion at list prices, in what could become the single largest order by any airline as it seeks to reinvent itself under its new owners, industry sources told Reuters.

India is expected to overtake Germany to become the world’s third most powerful travel and tourism market by 2032, according to World Travel and Tourism Council’s Economic Impact Research.

India will invest around $12 billion over the next two years in airports, aircraft and recruitment to meet the booming demand for air travel. The country aims to increase the number of airports from the present 148 to 220 by 2025, for which private builders will contribute roughly $9 billion, with the balance coming from the government-run Airports Authority of India. It entails new terminal construction, greenfield projects, and refurbishment of existing buildings, including old military airfields from the colonial era, as per a Bloomberg report. “We need to put in place the civil aviation infrastructure and capabilities that by 2047 would be able to support a $20 trillion economy within India,” said the country’s civil aviation minister Jyotiraditya Scindia at the ongoing CAPA India Aviation Summit in New Delhi. Scindia said passenger capacity at India’s six major airports is expected to grow to 420 million in four years from 192 million today, and Indian carriers’ fleet will grow to 2,000 aircraft in five years from 700. Additionally, India has eased leasing rules for airlines to lease more aircraft to address aircraft shortages as travel rebounds from the pandemic. He also highlighted how India had tweaked its airplane leasing program to enable airlines to add more aircraft to meet passenger demand, including more “wet leasing,” or renting of planes with crew, for domestic and international routes. Tata Group-owned Air India last month announced a record order for 470 jets and is due to take another 25 leased aircraft.

Indian airlines are expected to record a consolidated loss of $1.6 to 1.8 billion in the financial year 2023-24 ending March 31, 2024, according to aviation consultancy CAPA India. The full-service carriers are predicted to incur a loss of $1.1-$1.2 billion. With a net induction of 132 planes next fiscal, Indian airlines are estimated to take the total fleet of all carriers to around 816 aircraft. However, more than 100 aircraft from different Indian carriers are grounded as a result of supply chain and other issues. Highlighting the potential for growth in aviation, India’s civil aviation minister Jyotiraditya Scindia said that it was time for India to look at manufacturing aerospace products. He added that the aggregate fleet size of domestic carriers is estimated to reach around 2,000 aircraft over the next five to seven years. He claims that by the end of this year, up to 15 Flying Training Organizations (FTOs) could be established, bringing the total number of such organizations to 50 from the current 35. He emphasized the expansion of the drone industry, stating that it is projected to reach a value of approximately $40 billion by 2030 and produce about 250,000 million employees. All industries have an S-shaped evolution curve, and the minister noted that India is currently in the “infancy and growth phase” of its civil aviation industry.

Air India has become the latest entrant to hop on to the bandwagon of ChatGPT. Doing away with an outdated manual pricing system, the airline announced recently that it would be shifting to an algorithm-based software for setting airfares to extract more revenue from each flight. Its modern revenue management software continuously anticipates where people want to visit and how much each flyer is willing to pay, rather than the old method of having one fare for each block of seats — thereby ensuring higher revenue per flight. The airline will reportedly use GPT4 — the latest version of the revolutionary chatbot — to improve the FAQ section, pilot briefings, and more. Speaking at an event recently Air India CEO Campbell Wilson said that the use of the chatbot will not be “gimmicky”, but will be to actually enhance the airline’s functions. Last month, Air India partnered with cloud-based software company Salesforce to transform its customer experience. In another wheel of change under its new owner Tata, Air India is also testing ChatGPT to replace paper-based practices. “Frankly the system is almost so bad it’s good,” Wilson said, adding that this offered the chance to start from scratch rather than “jury-rig” existing architecture. The Tata Group is also integrating the Tata-related airlines, with the merger of Vistara with Air India and the integration of low-cost carriers Air India Express and AirAsia India. As part of its expansion plans, the Tata-owned airline last month had placed a record deal of 470 aircraft — 250 from European planemaker Airbus and 220 from U.S. aircraft manufacturer Boeing — at a list price of over $70 billion. 

A debate over market access was rekindled at an aviation event in India as foreign carriers seeking additional capacity to serve more routes in India feared the Tata Group-owned Air India’s rebirth and record order of 470 jets might capture most of the market. Dubai’s Emirates, Turkish Airlines and Kuwaiti carrier Jazeera Airways have all called for sharp increases in air traffic rights to and from India to meet demand. Vietnam and Indonesia also want more flights, an Indian official said. However, speaking to Reuters India’s civil aviation minister Jyotiraditya Scindia said the country has no plans to increase air traffic rights for the United Arab Emirates. He instead urged domestic carriers to fly long haul and help establish new hubs. “We are going to see an explosion of air traffic in India in the years to come,” he said, adding he wanted domestic carriers to focus on international expansion. “We are not getting enough share from this market,” Turkish Airlines Chief Executive Bilal Eksi said. Dubai has requested an extra 50,000 seats a week on India routes while Kuwait’s Jazeera Airways said the current weekly allowance of 12,000 was inadequate and asked for the cap to be raised to 28,000 seats.