Decoding Tata Group-owned Air India’s Aviation Deal for 470 Aircraft

India’s oldest airline, Tata Group-owned Air India, made news on February 14th by announcing the biggest aviation deal the world has seen so far. Air India is all set to take on the world-renowned European and Gulf carriers in the international market with this massive deal of nearly $80 billion.

The 470 aircraft order with Airbus and Boeing is the largest order from any Indian airline, and it includes wide-body and narrow-body planes.

While the first of the new aircraft will enter service by later this year, the bulk of them will arrive from mid-2025 onwards. With this record deal that beats American Airlines’ 460-plane deal in 2011, the Indian multinational conglomerate, Tata Group plans to modernize its airline fleet, expand its global market reach, and attain the size and quality befitting of a world-class airline.

Behind the boom of the Tata Empire

The 154-year-old Tata Group is reimagining business models and leveraging new opportunities in emerging industries. Over the last few decades, the group has consolidated 100-odd companies by grouping and merging similar businesses under 30 large ones across 10 verticals.

The $128-billion group is leaving no stone unturned in its mission to tap into a host of new opportunities across verticals such as FMCG, 5G technology, battery manufacturing and storage solutions, defence, electronics, semiconductors, and aircraft manufacturing, among others.

With a plan to create a bigger full-service carrier for a formidable presence in the aviation sector, the blue-chip group announced the merger of Air India with Vistara. It was a strategic direction prior to the order to buy Boeing and Airbus jets. The recent landmark aviation deal is touted to make Air India, the nation’s largest international carrier and second largest in the domestic market. With all their ventures, Tata Group has been known to take the route of first proving their business viability before pumping in more working capital, but that is changing now. Tata Sons Ltd., the principal investment holding company and promoter of Tata Group, is pushing the group forward with the assurance that it will provide the working capital wherever required.

With a stake in Air Asia India, the merger with Vistara and take-over of Air India, Tata Group is increasing its share in India’s aviation industry.

Air India’s dream takes flight again

Air India was founded by Jehangir Ratanji Dadabhoy (JRD) Tata in 1932 and was previously called Tata Airlines. The aviation division of Tata Sons Ltd. was listed as Air India in 1946. The international service became the first public-private partnership in India, with the government holding a 49% stake, the Tatas keeping 25% and the public owning the rest.

Air India was nationalized in 1953, and it was in 2020, the government decided to sell 100% of its stake in the state-owned national airline. With Tata Group emerging as the highest bidder, after nearly 7 decades, the airline brand returned to its founder. Tata Group won back full ownership of Air India as well as its low-cost carrier Air India Express.

What does this deal mean for Air India?

Prior to the deal to purchase the aircraft, in a bid to expand its fleet, Air India had leased 25 Airbus narrow-body aircraft and five Boeing wide-body planes.

Tata Sons Ltd., also had undertaken an overhaul and expansion of Air India which included plans to infuse fresh capital into the airline and refinance costly debt.

The record deal bolsters India’s position as an emerging aviation leader in the commercial sector. As for Air India, it puts them in the big league of aspiring international carriers.

The deal balanced between Boeing and Airbus was done with a central goal of expanding Air India’s footprint in the fast-growing Indian aviation market that has recently witnessed the rise and fall of many airlines.

India’s aviation industry is headed toward global dominance

Tata Group’s ambitious deal to buy 470 aircraft places India’s aviation industry on the global map. The deal is a step in the right direction to cater to India’s expansive flier base and a vast diaspora globally.

The deal with Airbus and Boeing, the two dominant players engaged in commercial airline manufacturing—is sure to help India expand its aviation industry and take on the global skies stronger than before.

Think Working Capital… Think CredAble!