A-I, IA aircraft buys to bring in Rs 10,000 cr business

The Rs 46,000 crore fleet acquisition plan of Air-India (A-I) and Indian Airlines (IA) is expected to bring in over Rs 10,000 crore business for Indian companies.

As part of the two national airlines acquiring 111 aircraft from Boeing Company and Airbus Industrie, the country will witness investment of over Rs 1,710 crore in aviation infrastructure, including maintenance and training facilities.

Engineering, information technology and avionics companies are set to bag outsourcing deals worth Rs 9,152 crore via counter trade and offset clauses within the mega deal.

A-I is planning to acquire 68 aicraft from US manufacturer Boeing at an estimated cost of Rs 36,000 crore, while Indian will acquire 43 aircraft from French manufacturer Airbus for Rs 9,890 crore to replace their ageing fleet. While the government has got a discount of Rs 349 crore from Airbus for IA, Boeing has given a discount of Rs 1,900 crore for A-I.

As part of the deal, Airbus will now set up an ultra modern training centre for pilots in the country at an investment of $75 million. This is likely to help cope with the growing shortage of pilots.

Airbus will also set-up warehouses and provide aircraft spare-parts in India. The aircraft-maker has given a commitment for setting up a maintenance, repair and overhaul (MRO) facility in the country along with other promoters at an investment of $100 million.

Counter trade and offsets by Airbus and engine manufacturer CFM International with the government is at 40 per cent. This will result in trade opportunities worth $145 million between India and France.

The government has also secured a similar agreement on offsets at 30 per cent of the value of the aircraft with Boeing, which works out to approximately Rs 8,500 crore.

Sources said the offset and counter trade clause would help Indian companies developed aircraft software solutions and avionics.

"Engineering companies such as Hindustan Aeronautics, L&T and Bharat Electronics, IT majors like Infosys and Wipro will benefit from these Rs 9,000 crore outsourcing deals. General engineering firms will also benefit," they added.

Meanwhile, as part of the deal with Air-India, Boeing has committed four training simulators, costing up to $75 million, and a $10 million facility for training and other civil aviation requirements.

Boeing will also invest $100 million for setting up a MRO, while GE will put in $20 million for an engine shop in India.

"Boeing and Airbus are together investing $200 million for a full-fledged MRO. This is going to boost the aircraft maintenance services in the country," industry analysts said.

Air-India is acquiring 50 new long-range wide-bodied aircraft for itself and 18 B737-800W aircraft for Air Charters Ltd (AICL) from Boeing, with delivery expected in October 2006. Indian will also be acquiring a fleet of 43 aircraft from Airbus.