Battle for skies: Tatas kick-start Air India fleet expansion via leasing

Airline to offer premium economy class

In its first move to significantly expand the fleet after the Tatas took over, Air India has leased 25 Airbus narrow-body aircraft and five Boeing wide-body planes. These will enter service starting December, the company said on Monday. A wide-body plane has a bigger fuel tank, allowing it to travel longer distances such as India-US routes.

“The aircraft being leased include 21 Airbus A320neos, four Airbus A321neos and five Boeing B777-200LRs,” Air India said. The lessors will deliver the planes by 2023-end, helping the airline increase its fleet size to 143 aircraft.

Changing its business model, Air India has decided to introduce premium economy class in all newly-leased planes. Air India's existing fleet is mostly limited to economy and business class. A few planes in its fleet also have first class.

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

To expand its fleet, Air India will also purchase planes and has been in discussion with Airbus and Boeing for the last couple of months. Air India decided to go for immediate leasing to prevent a delay in fleet expansion.

Typically, there’s a significant time lag between a purchase order and delivery of planes.

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

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

“Mumbai will see the addition of flights to San Francisco as well as to both of the New York area’s international airports, Newark Liberty and John F Kennedy, while Bengaluru will receive a 3x weekly service to San Francisco,” Air India said.

There has been a huge demand for Air India flights on India-US and India-Canada routes, especially after the outbreak of Covid-19 in 2020 and the Russia-Ukraine war earlier this year. Since the start of the pandemic, the India-US traffic that passed through the eastern side — one stop flights via Hong Kong or Beijing — has reduced significantly. After the Ukraine attack, Russia banned American and Canadian carriers from flying through its airspace. That forced many airlines to curtail their India-US flights.

The narrow-body planes procured through leasing will be deployed in domestic sectors as well as for short-haul international destinations. Keeping in mind the fleet expansion plans, Air India had recently raised the retirement age of its pilots from 58 to 65 years.

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

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

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