Air India's Massive Acquisition from Airbus and Boeing

The scale of this order surpasses any previous order placed by an airline in a single instance, globally. It even outdoes the 2011 order by American Airlines for a combined 460 aircraft.

• The deals are estimated to be worth around $70 billion and $80 billion respectively, although the precise amount is yet to be disclosed to the public.
• Airbus is a multinational corporation based in Europe, while Boeing is an American company.

The Significance of Air India's Deal

Economic Implications:

• The deal is expected to provide a significant boost to the Western economy, which is currently grappling with the aftermath of the Covid-19 pandemic and the economic slowdown induced by the Russia-Ukraine conflict.
• According to the US President, the order to Boeing will support over one million jobs across 44 US states. The British government has stated that the order to Airbus is worth billions of pounds to the UK. The deal with Airbus will also benefit engine maker Rolls-Royce, and create jobs in the UK where parts of the aircraft are expected to be manufactured.
• The deal will position the first Indian airline amongst the top 10 global airlines in terms of fleet size.
• This transaction will further enhance the Indian airline market, improving connectivity, affordability, and accessibility. Currently, India is the third-largest aviation market.
• The deal is expected to create lakhs of jobs in India.

Geopolitical Angle:

• Amidst India's discounted petroleum purchase from Russia, this deal reaffirms India's strategic autonomy in foreign policy. It indicates that India is willing to bolster its economic ties with any nation in its national interest, thus easing any potential Western skepticism.
• The deal is expected to enhance relations between India, the US, and France, thereby boosting cooperation in the Indo-Pacific region and countering China's increasing dominance.
• The deal sends a clear message that India and Indian companies are open to business with the world, irrespective of regional politics or geopolitical tensions. The announcement coinciding with India's G20 presidency further adds strategic value to the deal.
• The deal is expected to increase the frequency of international flights from India, thus promoting people-to-people ties, especially with regions like Latin America and Africa.

Concerns Around the Air India Deal

Despite the potential benefits, there are several concerns associated with the deal.

• The current aircraft market is dominated by Airbus and Boeing, creating a duopoly. Such a market structure may not be beneficial for consumers and could provide Western powers with a diplomatic advantage.
• The aircraft will not be manufactured in India. If they were, it could have bolstered India's self-reliance in aircraft manufacturing, generated employment, and provided technical expertise.
• Despite the deal, regional inequality and the development of airport infrastructure remain concerns.
• The Indian airline market is currently facing a financial crunch. This deal could exacerbate the already fierce competition in the industry.

Looking Ahead:

• In the long term, India needs to establish a local manufacturing base for aircraft and develop skilled manpower.
• Further strengthening of airport infrastructure is necessary.
• There needs to be proper synchronization with other modes of transportation.