Air-India inks Rs 35,000-crore (USD 8 billion approx.) pact with Boeing

MUMBAI/ BOMBAY: In the largest commercial airplane order in India's civil aviation history, national carrier Air-India today signed an agreement with US aerospace firm Boeing for purchase of 68 modern aircraft at an estimated cost of Rs 35,000 crore.

The agreement was signed between Air-India Chairman V Thulasidas and Boeing Commercial Airplane President and CEO Alan Mulally in the presence of Civil Aviation Minister Praful Patel at the Air-India office in south Mumbai.

Air-India's order consists of 23 Boeing 777s, including eight Boeing 777-200 LR (longer range) worldliners and 15 777-300 ERs (extended range), and 27 787-8 Boeing dreamliners. Besides, Air-India Express, a wholly-owned subsidiary of Air India will receive 18 Boeing 737-800s.

The agreement follows the clearance given by the empowered Group of Ministers to Air-India's fleet expansion proposal, the largest ever by an Indian carrier, after securing a financial discount of about Rs 1,000 crore.

The new range of aircraft sought to be acquired from Boeing company would offer Air-India operational cost savings and give it the flexibility to serve new, nonstop routes such as Delhi-New York and Mumbai-San Francisco, Thulasidas said.

Air-India currently operates a fleet of 11 747-400s, two 747-400 combis, two 747-200s, two 747-300 combis, three 777-200 ERs and 21 airbus 310-300s. The airline will use this order to support both fleet renewal and expansion plans. The 777s will replace the airline's current fleet of 747-200s airplanes while the 787-8 dreamliner will replace its aging A310 fleet.

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Airbus will now after the A380 flop just get more subsidies and though they have not even recouped the investment to develop the A380 they will begin production with a A350 soon. Nice to be a firm that has no budgetary restraint. If you need more money, just ask the consortium governments backing them. They'll fork out whatever - 13 BILLION dollars by early 2005 was the balance. Of course any mention of this will immediately get the response that a defense contract equates to a subsidy. That is the official "party line" defense. Absurd as it sounds that is literally what they use. Bottom line is that Boeing read the market better, built the right plane for the right customer, has better crash stats for its planes….. but it’s hard to compete when the competition is backed by the financial power of the tax payers in several country’s. Lockheed went broke after the DC-10. De Havilland went down because of the Comet. But Airbus won’t slow down or even loose market share because ultimately any bad management decision will be washed over with more direct financial injections of the Airbus consortium member states. Airbus has a canned market where anything they build the state operated airlines in the respective consortium member states will buy. That’s the reality of how pseudo-state run economies with a close link between business and government work. If Airbus needs hangers – no problem. The tax payer will flip the bill to buy them and put them up at Frankfurt International. State-run airlines, state run airports and a state run aircraft manufacturer – see a little issue here when it comes to “free trade”?

Right now Boeing is doing well, they build a better product, read the market better and though Airbus is being supported through “unfair trade” practices (Although the European court with it’s state picked bureaucrats said this was not an issue). It’s time for Bush to escalate this whole issue. It’s a known fact that Bush has his hands full. Iraq, pre existing tension with part of the EU and and and. Like with the US/Mexico boarder, Bush wants no new issues like this. However, the trade dispute with the EU reference Airbus should be addressed. Bush has largely backed down from the rhetoric in 2000. Obviously this is not his top concern. But it’s something which should be an issue. It’s something which like the boarder issue with Mexico should be forced upon the administration to deal with. If the administration does not want to raise the issue, others should.

Red6

Airbus has a canned market where anything they build the state operated airlines in the respective consortium member states will buy.

Air-France, Lufthansa and BA operate Boeing, incl iirc the 777. They are not forced to buy Airbus.

I am in India and have no axe to grind vis-a-vis Airbus/Boeing. I am a frequent flyer on both Jet Airways's B737's and Indian Airlines Airbus A320's. I know what i'm saying will get me highly unpopular on this forum, but I prefer the extra leg and elbow room on the Airbus to the somewhat cramped seating on the B737. And the 320 is an excellent product, despite whatever Airbus bashers say. Most new Indian carriers have opted for them over the B737. And I've flown the 732's ( IC ), 733,734,738 and the 739 series.

All the 747s operated by Lufthansa are built PRE-Airbus equivalent. They still bought 747s when all Airbus built was a A300, but once they build an equivalent platform Boeing is out of the race. Airbus is a newer firm, state created, by the consortium member states and did not offer all the planes in all different niches right from the start. Look at when the A340 went operational. However, once Airbus builds it, they will buy the Airbus product. Once the A300 was out Boeing lost that specific niche, once the A340 was out, Boeing lost that niche, once A380 is out Boeing losses that niche. They had to buy Boeing or Lockheed products in the past if they wanted to stay viable as airlines, but any "viable" Airbus alternative will be preferred over the Boeing product.

Realize that much of Europe is near a command driven economy. EADS/Airbus is state owned, created, and operated. Frankfurt International Airport is nearly 70% owned by the city of Frankfurt, state of Hessen and German Federal Government. The governor of Hessen until recent sat on the board of directors of the FRAPORT (See a conflict of interest?). Even Lufthansa is largely state controlled. Now, think about this – What airplane will the heavily state influenced airline, with it’s HUB out of the state owned airport buy? Maybe the state built plane? Once Airbus builds a viable equivalent to a 747 Lufthansa will buy it. Once Airbus builds a viable alternative to a Tristar or DC10, Lufthansa will buy it. Once Airbus builds a viable alternative to a 737, Lufthansa will buy it. 20 years ago Airbus had no alternative to a 747. Stating that Lufthansa operates Boeing products is a statement of the obvious. But once Airbus builds any product that is viable for a specific market niche, the state run airline (Not all in Europe are state run airlines) will buy the product. Example, Ryan air will buy Boeing 737s and German Wings buys Airbus, both are private and that's normal business, just as in the USW Airbus made good sales as a Boeing competetor, but when you look at the state run airlines within Euopre you see a trend. If Airbus builds it, they will buy it. A380 will be bought by who? Is it really that much better than a new version of a 747 which does not require major changes to infrastructure at termninals etc? Who bought the plane before it was even close to being built? Lufthansa, Air France..... See a trend?

Boeing does NOT have a fair shake with the state influenced or operated airlines within Europe.

Red6

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