Air India just placed orders for 220 Boeing & 250 Airbus aircraft
The crazy part? Joe Biden said it’s going to employ 1 million Americans
Here’s how this will pave India’s path toward becoming a superpower:
It’s a major event in our Indian history because the world superpowers are saying that an order from our country is going to create a lot of jobs there. This shows the MVP of another superpower in the making! We’ve been known for providing services, but now we’re providing jobs.
Now you must be wondering what’s in it for India. First, we need to acknowledge that Indian air traffic is expected to grow at the compounded growth rate of 7% per annum for the next 2 decades. India will become the 3rd largest aviation market in the world.
Even PM Narendra Modi claimed in one of his speeches that India needs more than 2000 aircrafts to meet the demand for air travel in the coming decades. And these 470 new aircraft will assist our aviation industry and create a major impact on the Indian economy.
Bringing more fleets to our country will increase direct, indirect & induced employment.
• More personnel will be required to operate and maintain those aircraft.
• More service providers would be needed in Air Navigation along with on & off-site fuel suppliers, call centers, lawyers, etc.
It would be next to impossible for the existing infrastructure to support the deployment of more than 450 aircrafts — on 100s and 1000s of routes. So, our govt would be required to escalate the infrastructure expansion. This will also create more job opportunities as more Pvt. co.s would be asked to work on these mega projects.
Cheaper Air Travel:
With a massive addition to the current fleet of Air India, the prices of air tickets are likely to go down in the future. The price war is unlikely, but in order to stay competitive, other airlines might reduce their fares too.
An Aid to Railways and Roadways:
Reduced airfares would further democratize air travel and take some load off the existing transportation systems.
Boost to Tourism:
More aircraft means better connectivity and lower cost of transportation.
So we can say that in all, this deal would upraise the tourism industry in India and abroad.
Now, why do you think Air India took this major step? Because they want to be the biggest fish in the sea? Obviously, yes.
This is the right time to capitalize when other airlines are either debt-ridden, cash trapped, or simply shutting down.
But there are some other strategic reasons as well:
1. Replacement of Old Carriers: Most of the aircrafts of Air India are very old, which is the major pain point for the co.
So they’re willing to replace some of them with the new carriers.
2. Cost-efficient: As the operations outspread, economies of scale kick in.
This means that with the expansion of Air India’s fleet, the per unit cost of customers are more likely to go down.
3. Hypercompetitive Industry:
Aviation industry is an oligopoly market. So, to stay competitive and relevant, Air India took this industry altering decision.
There’s one more thing that we would like you to understand. Privatization of any primary corporation in India is frowned upon. But we need to acknowledge that privatization allows co.s to think differently and make bolder bets. And these risks result in value creation for partners throughout the world. That is why privatization is such a great move!
It also impacts the industries and how a country functions — and TATAs are leading from the front. Now with more aircrafts, Tata led Air India will be able to serve more people and serve them in a better way. This will help more people travel by air and boost our domestic air ecosystem.