Air India’s Mega Jet Deal Grounded


Air India’s mega jet deal with Airbus and Boeing has hit a roadblock due to a debate over engine costs. The deal, which would see the Indian national carrier purchase around 300 planes from the two manufacturers, has been delayed as Air India and the manufacturers have been unable to reach an agreement on the cost of engines for the aircraft.

Boeing Co. is stuck in a standstill as Air India Ltd. acquires 500 aircraft from Airbus SE, and one of the largest single acquisitions in the history of civil aviation is being delayed by the 737 Max’s engine suppliers. The joint venture between CFM International, General Electric Co., and Safran SA is unwilling to provide significant discounts on engines and maintenance, which generally go along with large orders. The issue at hand is how much per hour Air India would pay for repairs.

Air India had intended to purchase around 150 planes from Airbus and a similar number from Boeing, with the aim of modernizing its fleet and expanding its routes. The deal, which would be worth billions of dollars, has been in the works for several years, but has been held up by the ongoing debate over engine costs.

Air India has reportedly been pushing for a lower cost on the engines, arguing that the cost of the engines should be included in the overall price of the planes. The manufacturers, however, have been unwilling to lower the cost of the engines, citing the high cost of research and development.

The impasse has caused delays in the deal and has raised concerns that the purchase may not go through at all. Air India is a state-owned carrier and one of the oldest airline of India, and the government has been keen to see the deal go ahead, as it would be a major boost for the Indian aviation industry.

The situation is still developing, and it remains to be seen whether a compromise can be reached between Air India and the manufacturers. However, the delay in the deal highlights the challenges faced by state-owned carriers in securing major jet deals and the importance of cost-benefit analysis before signing such agreements.


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