‘Methodical, Tough, Sophisticated’: How Air India Negotiated Its Mega Plane Order

Air India, part of the Tata Sons conglomerate, on Tuesday announced that it has signed letters of intent with Airbus and Boeing to acquire 500 aircraft

Air India, part of the Tata Sons conglomerate, on Tuesday announced that it has signed letters of intent with Airbus and Boeing to acquire 500 aircraft. The order comprises 40 Airbus A350s, 20 Boeing 787s, 10 Boeing 777-9s widebody aircraft, 210 Airbus A320/321 Neos, and 190 Boeing 737 MAX single-aisle aircraft. 

The deal is part of the company's plan to revamp itself. The 500 aircraft will cost Talace Private Limited, a special-purpose vehicle of Tata Sons that owns Air India, more than $100 billion, according to the news agency Reuters.

The company informed that the A350 aircraft will be powered by Rolls-Royce engines and the B777/787s by engines from GE Aerospace. All single-aisle aircraft will be powered by engines from CFM International.

Leaders of Both India hailed the mega agreement as a shining example of mutually beneficial cooperation. However, the talks behind this deal were not that simple. According to a Reuters report, serious talks began last summer and continued until days before Christmas when outlines were agreed upon. Negotiators from Air India, plane makers, and other stakeholders camped out at the St James' Court hotel near Buckingham Palace in London's West End.

According to the report, through this deal, Airbus wanted a bigger piece of India’s wide-body airline market. On the other hand, Boeing was seeking to restore its position in India's single-aisle jet market. 

Negotiations were led by Air India's chief commercial and transformation officer, Nipun Aggarwal, and Yogesh Agarwal, head of aircraft acquisitions, the report said. Adding that talks often stretched into the night. One person told the news agency Reuters, “Air India negotiated hard and the team is very sharp despite having no prior aviation experience. They compare with some of the best dealmakers in the business.”

A second person said the Air India negotiators were "methodical, tough, and very sophisticated".

However, the deal announcement date, originally proposed on the anniversary of Tata's Air India takeover, couldn’t happen as talks regarding the aircraft’s engine continued. 

According to the report, the biggest overall winner is General Electric (GE.N) which picks up the lucrative engine deals, with its CFM joint-venture with Safran (SAF.PA) beating Raytheon-owned (RTX.N) rival Pratt & Whitney on Airbus A320neos. 

However, Industry analysts caution as many obstacles still remain in Air India's revamp plans, the report added.