>> flying high. india's national airline seals the biggest deal in aviation history. air india buying 470 jets from airbus and boeing. will it be a game changer? can the airline break the dominance of major golf carriers? this is inside story. ♪ >> hello and welcome to the program. it is the biggest deal in the

history of civil aviation. india's largest international carrier, air india, is seeking to reinvent itself by expanding operations and modernizing its fleet. it has reached a multibillion-dollar landmark deal to buy 470 new aircraft from airbus and boeing. a record for the industry. french president emmanuel macron called it a new success and opportunity develop new areas of cooperation with india. u.s. president joe biden echoed the sentiment, saying the boeing order would support more than one million american jobs. >> this is one of the world's busiest airports. hundreds of planes carry thousands of passengers in and out of new delhi every day. india is one of the world's largest aviation markets and also one of the fastest growing. now this airline is expanding its fleet. air india has placed orders for

hundreds of planes with two of the world's top aircraft manufacturers. american company boeing and european giant airbus. the deal is worth billions of dollars and the largest in history. air india is india's largest international airline and second largest domestic. this is part of an ongoing effort to turn the airline around. it was run by the government for decades -- losses and debt. last year, one of india's oldest conglomerates took it over. the company says it can expect the first batch of planes to arrive by the end of the year. >> the deal struck by air india is part of an ambitious overhaul by the tata group. the countries largest conglomerate has ordered 250 planes from airbus and another 220 jets from boeing. it is expecting demand to continue to rise for the new planes -- rise.

the new planes will add more long-distance roots. boeing projects passenger traffic in india will increase 7% annually in the next two decades. all this comes as the nations airline business is booming, the government planning to build 80 new airports in the next five years. ♪ >> joining us from london is andrew charlton, managing director of aviation advocacy. in new delhi, editor of -- a news website on aviation and travel trends. also in london, aviation consultant -- a warm welcome to you all. a.j., how significant is this deal? >> this is a massive deal by all shapes and sizes. it is the biggest commercial aviation deal in the history of aviation. it is not just significant for india by it is significant

globally. with respect to air india, this provides them with the equipment they need for their plans over the next 10 years or so. this will help them repair, replace the old aircraft they have been operating and bring in a more modern, sustainable fleet. as well as start more international flights to the u.s., europe and other parts of the world. this is going to be significant for them. >> andrew, do you agree this order is a step in the right direction? >> there's a few things to say. first of all, absolutely. it is the largest order in history. it is the first order for air india since 2005. it is a huge replacement and refreshment of their fleet, which is absolutely necessary. also, some of it is for shuttle

flying, domestically within india but also to the near countries around india. but also come a significant number of aircraft that can fly long-haul to the united states, u.k., australia, places where they can get to the large indian diaspora. which i think not only is significant for air india, it also changes the balance for competition in the region as well. >> all important points we are going to get into shortly. what you think? ordering your craft i suppose is the easy part. now comes the hard part. success is not a done deal yet. how big a battle is it going to be for air india to turn things around? >> first of all i would like to say this is a big -- intent by air india and the indian government to actually support the growth of this airline which has been stagnant for some time.

what is really going to happen, you have seen over the years how the goals carriers -- the big carriers have really shown strength and might. all three carriers in the middle east have been known to carry a lot of traffic from india. probably 60% of the traffic that goes to europe in the u.s. comes over the gulf. this a big market that air india has been missing out on. mostly because it does not have the aircraft. but this is a big statement of intent to really take on the big boys. this will take time. one of the biggest things is this deal has injected a level of pride in indians, indian travelers coming to bring them back on board, to fly air india. it is going to take quite some time to actually overcome that sort of traffic flow, flyover the gulf to other markets.

>> how challenging do you think it will be to compete against gulf carriers, given their loyal base? >> it will be challenging. you're fighting against three high-class airlines, high-quality airlines with an established customer base. on the upside, 60% of the traffic out of india to many long-haul places those with one-stop somewhere in the middle east. dubai or whatever. if you can offer nonstop services, that is obviously better. and that is a direct improvement. it will also stimulate competition and further growth further indian carriers as well. we have seen indigo announcing new deal with turkish airlines to expand its long-haul network to try to get into that huge indian diaspora and to try to build market share from there.

i completely agree that it is a statement of intent and things will take time. it is an interesting time. >> there was a report by the center for asia-pacific aviation which is estimating that indian carriers are expected to place orders for 1500 to 1700 aircraft over the next 24 months. clearly there is more to come. how does this change the indian aviation landscape? >> a lot of the aircraft that we are talking about are going to be used for domestic and regional aviation. like andrew mentioned, a lot of these aircraft could perhaps be used to fly between mumbai, delhi and the 100 other airports we have. but then, the same aircraft during the night or other parts of the day are used to fly to the middle east, dubai,

singapore. all of these aircraft that are coming in, i know -- has placed an order. indigo has 500 aircraft due to be delivered to them, including some long-range xlr aircraft. -- which is a new airline that only started operations in august last year, is already talking about the second order. they place an order with boeing already, which fills them up for four or five years, but they are already talking about a second-order to be placed. a lot of these aircraft will compensate, will be needed to fly to new airports that are being constructed in india right now. hopefully some of these will also be used to bridge the traffic, let's say, to have people fly one hop into the middle east or further down to

europe as well. >> but the airline will also have a bit of a challenge in terms of when it comes to modernizing its operations. software, maintenance, systems for the new aircraft. how big a challenge is that going to be? >> a lot of work has been going on in the background. there has bit -- it has been only one year since air india was acquired by the tarter group. -- is now a privatized carrier. what i know is that there are all sorts of systems being changed at air india right now. obviously from the software migrations to new software and new sop's, -- talked about establishing an aviation academy to bring in more pilots, captains, to steer their -- the

aircraft. it is a massive effort but i think everybody who is anybody selling aircraft and software services in the aviation business has made a trip to india over the past year trying to convince air india to sign up with them. i guess that effort is already showing. its five-year turnaround plan, we will see a lot more things change as time passes and as those efforts show up. air india is already spending $400 million. they have committed to spending $400 million to modernize the other aircraft they already have in their fleet. the 787's, 777 and so on. >> you are optimistic air india can improve its service? there's some reaction i have seen that critics say the product remains below industry standards.

>> at the end of the day, you're making a huge investment in new aircraft, and refurbishing existing aircraft. there is a five year plan which is a five-year transformation plan. nothing can be done overnight. give them some time. at the end of the day, we have an airline here that has had a long history of substandard service, mismanagement, for decades. tarter has come in a year ago, 12 month ago, to really put angst back on track. as i mentioned earlier, there is a statement of intent. they are going to make waves and if they want to become a global carrier of choice. that is the ultimate objective. that will take time. it is not overnight. there are lots of cynicism but i am optimistic. i think this transformation program is the right step following the purchase 12 months ago.

they've got a new managing director coming from southeast asia. a long history of running airlines. they have actually brought in talent to reinvent the airline. let's give them a chance and let's let everyone get behind them, take it or leave it indian diaspora. in today's world where you look at the great connectivity of flights between different destinations, this is what air india wants to do. beef up domestic operations so it can feed its international services. >> wouldn't you say they are still really lagging behind at this point? i am glad you bring up the transformation plan because the transformation plan is being kept somewhat close to their chest. what details do we actually know about that transformation plan? >> the transformation plan is that changing the processes

internally within the airline. they are looking get new service standards. whether it is catering, how the engineering works are carried out. the technical side, which -- the i.t. infrastructure. communications, marketing, sales, network optimization. right now their network is not optimized. for example, in the u.s. they have 47 flights a week into the united states. to five gateways in the u.s. they really need to beef up that network to cover other places like kolkata, and europe as well. 47 flights a week. as opposed to emirates which has over 100 flights a week from dubai into the u.s., 11 gateways, more than 11. devise a small market. they are taking the traffic away

from india. what india is trying to do is build up that level of confidence. they can open up new routes, bilateral's permitting command really make a go of it. service will have to improve at the end of the day. that is a big task for us internally. looking at service, how they market their operations, how they sell their operations, the distribution assets they have in terms of who they sell to. travel agents, online direct, their website. their website still has a long way to go to improve service. there's a number of taskforces within the transformation program that are looking at different areas of the business. >> andrew, what about the actual infrastructure? does india have adequate capacity to handle a large surge in passenger traffic?

>> fantastic question. can i just pick up on that last point, i think we've got to take some comfort from the fact the transformation started a year ago and it is only now the aircraft order has been placed. it indicates that perhaps they are putting the horse before the card. it is important that you get all of the internal things right, get them planned and mapped before you throw a huge number of new aircraft at the market. and yes, you're right, the infrastructure question is vital. but what is really interesting and that is that india has not hold its weight as an aviation market in the way that really it ought to. and really we can expect it to. geographically it is in a fantastic location in terms of the linking east with west. it has a huge domestic market, a huge diaspora as well as a tourism market. india should be, and the market is growing, it is young.

india should be a really strong aviation player. it -- when 60% is being carried by carriers outside of india. so yes, this is a statement of intent. you are absolutely right, infrastructure is going to have to continue to grow. and continue to develop so that the entire system can work across. it is sort of a chicken and egg thing. less to have the infrastructure, you can have the aircraft. if you don't have the aircraft commute on need infrastructure. this will put -- on everybody but if it comes off commit will be absolutely contested. >> let's bring in a.j. from new delhi. you talked about infrastructure and india's need to improve infrastructure. >> as we speak, there are already in the past two months we have had a new airport.

in the state of -- , which is already starting to handle a lot of domestic flights and they are stated -- slated to open to domestic flight soon. there is a new terminal launched in the metro. the two biggest gateways in india, delhi and mumbai, are getting second airports. the constructor is on. i think in the next year and a half we will start seeing them going lives. as these aircraft come, we are actually working on -- infrastructure. these are new, modern airports with minimum connecting times being reduced and optimized for international traffic flow. the delhi airport, already existent, is working on a runway which is due to go live anytime in the next 60 days, i believe. the infrastructure is -- the

airport infrastructure is being worked upon. metro police airports actually white bodies fly out jfk, san francisco, parts of europe will all be able to cater to these requirements very soon. darker let me bring in andrew. i see that you wanted to respond. >> not to respond, to supplement. the other part of the infrastructure people ignore his air-traffic control. on airport authority of india has also put in a remarkable upgrade. it is rapidly developing so can handle the traffic. it is wanting to have the airplane, another to have the airports, but you also need air -- air traffic control. >> how important is this for boeing and airbus? and also suppliers like ge, who

is making the engines? >> does is a huge deal. a lot of the suppliers have been flying into india over the last few months just to try to think the deal. what is going to happen now is because it is such a huge market just like china, you're going to have these suppliers looking at setting up operations in india. obviously supply chain, where there is nuts and balls, windows, tires, whatever. there are so many options, so many options. that is going to happen more. some supplies are already looking at india as a destination, a place to actually set up manufacturing plants to improve supply chain. for boeing and airbus, this is a massive deal. >> for moody himself, is this

seen as a political win? the fact that as that hoop -- was saying, countries will be looking towards india more than china as china relations with the west are somewhat fraud? >> it was a deal that had the president of france and the president of the united states announce. obviously, the scale is massive. what is going to be the focus for the indian bureaucracy and administration is going to be to try to get as much benefit out of this domestic manufacturing. one of the things that is usually ignored is airbus manufactures parts of the aircraft in india, which are fitted on every 1821 that flies around the globe. we don't talk about it much, but yeah, it is many factored in india.

the doors of the aircraft, i believe. >> for moody himself, is he succeeding here in leveraging india pass geopolitical and economic progress to maintain good relations with the u.s. and its allies? what messages he sending? >> at this point in time, there is no political message. apart from the fact that india is an economic superpower in the making. obviously it helps everyone to be on the right side of india and deal with india in an appropriate fashion, rather than as a pushover. >> andrew, do you agree with that? modi is accused by some of cracking down on dissent. more recently. is this a way to distract from accusations? >> that's a little bit of a long. it is interesting both at a

political level and an aviation only level that the deal, and almost every other large aircraft order you can think of, splits quite equally between airbus and boeing. from modi's perspective, to keep america on side and make an announcement with president biden, then with president macron as well, will not do him any harm and will not harm india in the eyes of europe and america. from that perspective, it is always good. but an aircraft order of this size has frequently seen the president wheeled out to smile at the cameras. politically, it certainly does no harm at all. i think fascinatingly that airbus and boeing, the airlines clearly want competition between the mainframe manufacturers. both companies make excellent airplanes -- and i realize there are fine nuances -- but almost interchangeable.

yet airlines come a time after time, split their orders. even though that is less efficient because you need two sets of engineers and so on. they split their orders 50-50 because they acknowledge that having fierce competition between airbus and boeing is good for them long-term. there has never been a discussion about it. i'm not accusing airlines of -- but it is very much the way in which it is done. i find that fascinating. >> would you like to weigh in on what we just heard? also, comment on the political? >> it keeps both camps happy. where there is france, the u.s., but at the end of the day, there are only two companies that can actually manufacture aircraft of this scale. boeing and airbus.

which way do you go? who do you support? i thick it is more of keeping both manufacturers in hand rather than anything else. politically, yes, you could argue it is politically motivated. that they had to place the order and who will they place it with? which one? europe or the u.s.? >> how much does the air transport sector actually contribute to india's economy. >> air transport is no more than 4% at this point in time. but, that is not -- the only way of looking at it. what we have seen over the past 15 to 20 years as air travel has kind of become mainstream as compared to luxury has been the fact that air travel really -- time is money.

basically, air travel is cutting down long journeys. into two hour flights. people would be able to -- more and that ways it is indirectly helping the economy. by helping people to be in different places at the same time. and of course, tourism. so, as air travel grows, tourism grows as well. because as more people fly across the country and as more international tourists come to india, we will be able to increase the share of gdp. it is indeed a big part of how in the's gdp contribution -- india's gdp changes. >> andrew, final word.

>> i think there's two more aspects of what i just said. the first is of course when you take people off the road and put them in the air, you have increased safety. that is good for the economy all around. the other point we should talk about is these new aircraft are much more efficient and burn less fuel. they will have fewer emissions. it is a good contribution toward growing the economy, and doing so in a way that is environmentally conscious with lower costs. >> important points but i am afraid we have run out of time. thank you to my guests. thanks for joining us. thanks for watching. you can see the program again any time on our website. for further discussion, go to our facebook page. join the conversation on twitter as well appeared our handlers

a.j. inside story. for myself and the whole team, thanks for watching. ♪ pppxxxx■]■t■]■o