Airbus cements position in India as Air India gets first A320 neo

The manufacturer says it will see demand for widebody aircraft in the region

French manufacturer Airbus on Thursday further strengthened its position in the Indian market as state-owned airline received its first A320 neo becoming the latest client of its popular single-aisle aircraft model.

Air India aims to have 29 A320 neo in its fleet by March 2019 out of which 14 will be delivered this year. While Air India has already tied up with three lessors — ALAFCO, GECAPS and CIT — for 22 planes, the process to select a bidder for the remaining seven such planes is underway.

Currently, Airbus has more than 200 aircraft in India and an order backlog of more than 520 Airbus A320neo, giving it a market share of more than 70 per cent in service. On an average, Airbus will deliver one aircraft each week over the next ten years.

“The A320 neo is a very popular aircraft due to its fuel efficiency, on an average it at least brings down fuel cost by 15 percent and helps an airline in saving money,” said Srinivas Dwarakanath, president, commercial aircraft at Airbus India according to whom  Airbus is delivering one aircraft every week.

Market leader IndiGo along with low-cost carrier GoAir and full service airline Vistara are Airbus clients and have ordered the A320 neo aircraft. IndiGo in two tranches in 2011 and 2015 ordered 530 aircraft which includes 430 neo. In the Farnborough Air Show held in July last year, the manufacturer bagged an order of 72 A320 neos from GoAir.

“The India market is strategically important for us as it is growing at 20 percent per year and also many new flyers are being added, with newer single-aisle aircraft, airlines based in Delhi can serve "around two-thirds of the world’s population, " said Dwarakanth.

According to its own market forecast for 2016-2035, Indian carriers will require 1,610 aircraft over the next twenty years, This will include 1,230 single-aisle narrow-body aircraft and more than 380 wide-body passenger and freight aircraft which continues to see significant demand.

Seattle-based rival Boeing recently bagged a $22 billion order from SpiceJet- its largest order from an Indian airline which consists of 100 of Max single-aisle jets and renegotiated terms for 55 previously ordered aircraft. 

Dwarakanth said that Airbus is looking to get new clients and order in the widebody category. “An aircraft like the A330 neo is efficient in this market as it will fly long distance and also reduce the fuel consumption resulting in a low cost-per-seat mile,” Dwarakanath said. Curently, the widebody market in India is dominated by Boeing with Air India and Jet Airways as clients.

On being specifically asked whether the airline is in discussion with Vistara for wide-body jet, he said, “We are talking to them constantly as we do with all airlines.” Vistara aims to fly internationally by mid- 2018 and will be looking at a widebody fleet.

Airline executives say Airbus is popular with Indian carriers as it suits their business model with majority of the market is dominated by low-cost airlines which primarily focuses on shorter domestic routes.

“The choice of an aircraft by an airline depends mainly on their business models and those models determine fleet selection. If an airline prefers to buy not only from a single manufacturer, but a single type from a single manufacturer, that is part of that airline's decision regarding its business model. In India, most of the low-cost airlines focus on domestic routes and fly single-aisle aircraft, Airbus gets an impetus there,” said a senior executive of an airline.