After well over a decade without adding new aircraft, state-owned Indian Airlines has finally secured government backing to order 43 Airbus narrowbodies to help it better compete against fast-growing private carriers.
The order was approved more than three years after Indian Airlines began to seek government approval for it – and many years after fleet modernisation and expansion studies began.
Approval was announced in New Delhi by Indian prime minister Manmohan Singh after a meeting with visiting UK prime minister Tony Blair. It means the carrier can now sign a final contract with Airbus covering an order for 20 A321s, 19 A319s and four A320s.
Deliveries are to begin in mid-2006 and continue at a rate of one aircraft a month. For Indian Airlines the order is considered vital if it is to keep up with the rapid growth in demand for air travel within the country, spurred on in part by the launch of low-cost airlines.
The domestic market share of Indian Airlines has fallen steadily over the years as established privately owned carriers Air Sahara and Jet Airways have expanded. It fears losing much more market share as a result of new low-cost airlines such as Air Deccan, Kingfisher and SpiceJet.
The board of Indian Airlines approved the proposed order for new aircraft in March 2002, but the current government repeatedly deferred approving it, as did the government that was in power at the time of the board’s decision.
The airline has in the meantime been forced to expand its fleet with leased aircraft – as has fellow state-owned carrier Air India, which has separately been seeking government approval to order dozens of Boeing aircraft.
The government granted final approval after Airbus agreed to new concessions. Civil aviation minister Praful Patel says the new “net cost” of the order will be Rp98.9 billion ($2.25 billion), down from Rp102.3 billion.
Counter-trade and offset commitments have also been increased, while Airbus has agreed to set up a pilot-training centre in India, establish spare-parts warehouses in the country and create a maintenance operation with local partners, says Patel.
NICHOLAS IONIDES/SINGAPORE
Source: Airline Business
