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Battle for the skies: Tatas kick off Air India’s fleet expansion through leasing

To expand its fleet, Air India will also buy aircraft and has been in talks with Airbus and Boeing for the past few months.
As the first step to significantly expand its fleet following the Tatas takeover, Air India has leased 25 Airbus narrow-body aircraft and five Boeing wide-body aircraft. These will be operational from December, the company said on Monday. The wide-body aircraft has a larger fuel tank, allowing it to travel longer distances, such as routes between India and the US.

“The leased aircraft include 21 Airbus A320neo, four Airbus A321neo and five Boeing B777-200LR,” Air India said. The lessors will deliver the aircraft by the end of 2023, which will help the airline increase its fleet size to 143 aircraft.

Air India, which is changing its business model, has decided to introduce premium economy class on all newly leased aircraft. Air India’s current fleet is mostly limited to economy and business class. Several aircraft in its fleet also have first class.

Vistara, which is a 51:49 joint venture between the Tata Group and Singapore Airlines, is the only other airline in India that offers a premium economy class.

To expand its fleet, Air India will also buy aircraft and has been in talks with Airbus and Boeing for the past few months. Air India opted for immediate leasing to avoid delays in fleet expansion.

There is usually a significant time lag between ordering and delivery of aircraft.

Air India’s narrow-body fleet comprises 70 aircraft, of which 54 are in service. Its wide-body fleet includes 43 aircraft, of which 33 are operational. The rest of the existing narrow-hull and wide-hull fleets will gradually return to service in early 2023.

Air India last signed a leasing agreement in March 2016. It was signed with Kuwaiti leasing company ALAFCO for 14 A320neo aircraft. The airline said on Monday that the leased B777-200LR will join the fleet between December 2022 and March 2023 and will be deployed on routes from Indian metro cities to the US.

“Mumbai will get flights to San Francisco as well as both international airports in the New York area, Newark Liberty and John F Kennedy, while Bengaluru will get a 3x weekly flight to San Francisco,” Air India said.

Huge demand for Air India flights on India-US and India-Canada routes, especially after the outbreak of Covid-19 in 2020 and the Russo-Ukraine war earlier this year. Since the start of the pandemic, traffic between India and the US that passes through the eastern side — flights with one stopover via Hong Kong or Beijing — has declined significantly. After the Ukrainian attack, Russia banned American and Canadian aircraft carriers from flying through its airspace. This has forced many airlines to curtail their flights from India to the US.

The narrow-body aircraft acquired through leasing will be deployed in domestic sectors as well as for short international destinations. In view of its fleet expansion plans, Air India recently increased the retirement age of its pilots from 58 to 65 years.

“After a long period without significant growth, Air India is delighted to resume its fleet expansion and global footprint… Air India has exciting expansion and renewal plans, of which these new aircraft are just the beginning,” said Campbell Wilson, CEO and CEO of Air India.

Air India will overhaul flight schedules, hold night meetings and ask employees to accurately report flight delays and their causes to improve the carrier’s on-time performance (OTP), Campbell said earlier this month.

The Tata group won the Rs 18,000 crore bid for Air India on October 8 last year and completed the acquisition earlier this year.

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