PARIS/DELHI, June 19 (Reuters) – Airbus, the European aircraft manufacturer, made history on Monday by securing a groundbreaking deal with IndiGo, India’s largest budget carrier. This deal represents the largest-ever order of narrowbody jets placed by a single airline, with IndiGo purchasing 500 A320neo-family aircraft. The announcement came on the opening day of the Paris Airshow, solidifying IndiGo’s plans for substantial growth in response to the increasing demand for regional travel in India.
The multibillion-dollar agreement outshines Air India’s recent purchase of 470 jets, highlighting the fierce competition between India’s two major airlines to cater to the booming regional aviation market. Months of negotiations preceded IndiGo’s decision to place this monumental order, with industry sources hinting at the likelihood of a 500-plane deal leading up to the event.
IndiGo’s CEO, Pieter Elbers, expressed his enthusiasm for the deal, emphasizing that this is just the beginning of the airline’s expansion plans. Recognizing the growth potential of India’s aviation market, Elbers deemed it the perfect timing for IndiGo to make this significant investment. The delivery of the ordered aircraft is scheduled to take place between 2030 and 2035.
Indian carriers have been striving to keep up with the rapid growth of the country’s aviation sector, which serves the world’s largest population. Despite manufacturers facing challenges in meeting production targets, Indian carriers now possess the second-largest order book globally, accounting for over 6% of the industry backlog, trailing only the United States, as reported by Barclays in June.
However, some analysts have raised concerns about potential over-ordering of aircraft by airlines competing for the same passenger base. Following the signing of the IndiGo deal, Airbus CEO Guillaume Faury stated that it is premature to consider increasing narrowbody jet production rates beyond the planned 75 per month.
Airbus has encountered production difficulties during the post-pandemic recovery period, causing the company to postpone its mid-decade production target from 2025 to 2026. Nonetheless, Faury assured that supply disruptions were relatively short-term issues when compared to the delivery schedules spanning the next decade.
Looking ahead, Airbus has indicated its consideration of developing a successor to the A320neo aircraft between 2035 and 2040. This implies that IndiGo may have negotiated the option to switch to the new model or modify delivery schedules to avoid being surpassed by technological advancements, according to analysts.
IndiGo, which dominates almost 60% of the Indian domestic market, has chosen to stick with Airbus as its supplier of single-aisle aircraft to leverage economies of scale. However, the airline has not yet determined which engine supplier it will partner with for this latest order. Approximately 480 jets from previous orders still remain in IndiGo’s Airbus pipeline. Elbers believes that the new order will enable the airline to double in size.
In addition to the narrowbody aircraft order, IndiGo is concurrently engaged in discussions with Airbus and its rival Boeing for the potential purchase of 25 widebody planes. Sources reveal that the options under consideration include the Airbus A330neo and the Boeing 787. Elbers refrained from commenting further on additional aircraft orders, leaving room for future developments and decisions.
