While the rumor has been going on for a couple of months, Indian flag carrier Air India could finally be inching close to ordering approximately 500 aircraft, as analyzed by one of the world's leading aircraft lessors, Air Lease Corporation. As the flag carrier joins the growing list of airlines placing sizable orders, what could this mean for the aviation industry?
A renewed look at the rising bulk order trend
Although it is not significantly new information about Air India's bulk order, it brings a renewed perspective on how quickly the majority of airlines worldwide have been recovering and attempting to ramp up capacity to meet increasing demand. The Star Alliance member's highly anticipated order announcement follows large orders last year from Delta Air Lines and WestJet's strengthening their commitment to Boeing for more than 30 Boeing 737 MAXs.
Last year also saw several Chinese carriers placing hundreds of orders for Airbus aircraft and United Airlines' biggest-ever order of 200 planes. These were just a few of the recent large orders placed with aircraft manufacturers, and the trend reveals that the numbers are getting higher. For most airlines who are able, it's come to the perspective of 'order big or go home.'
As reported by Reuters, Executive Chairman of Air Lease Corporation, Steven Udvar-Hazy, highlights this perspective by suggesting:
"As a result of the recovery following the pandemic, there is now more momentum for large orders from airlines who have previously sat back and watched the movie. And now, they are seeing that there's going to be a positive trend."
The string of major aircraft orders signifies more than just airlines trying to ramp up their capacities to meet demand, but also how airlines are renewing their fleets to actively and quickly replace older birds. Such is the case with Air India, as the big order would undoubtedly play a crucial part in the flag carrier's revival under the Tata Group by replacing its older fleet members, some of which are more than a decade old.
While some members of Air India's fleet might be ten or more years old, these are not necessarily old airplanes. As it is, the fleet could probably fly for several more years. Still, the flag carrier, like many airlines today, is opting for quicker replacements to compete with other modern carriers. Udvar-Hazy confirms this perspective as he continued by saying:
"We expect many airlines to continue to place large orders, and again, most of these orders will be for replacement."
But age is just a secondary factor for Air India and probably many of the airlines that are presently placing orders. The primary reason would be fuel efficiency, as newer generation aircraft can transport more passengers and fly further, all while burning less fuel. For airlines, the improved fuel efficiency would reduce operating costs and aid them with the global aviation industry's goal of carbon-neutrality by 2050.
Pressure on the manufacturers
With the orders piling in, and airlines ready to renew their fleets and increase capacities, are aircraft and engine manufacturers able to cope? Certification issues side, the previous year saw supply chain issues that heavily disrupted aircraft production rates due to the lack of parts, which eventually resulted in delayed deliveries.
Aircraft lessors can provide a temporary solution for airlines that urgently need increased capacity, as Air India already showed when it leased six Boeing 777s to augment its widebody fleet. However, the aircraft leasing market will become increasingly limited, and the pressure will still be on the manufacturers, even more so once the lessors start placing their own orders to enhance portfolios
Additionally, production rates are not precisely back to pre-pandemic levels, yet demand for new aircraft continues to soar, with more airlines speeding up their recoveries. This means added pressure on the manufacturers to increase their production rates so that supply will meet the demand, as emphasized by Udvar-Hazy:
"It's to be expected that OEMs will be under pressure in the next couple of years to increase production rates, not necessarily back to the levels they were in 2018, but certainly well above current production levels."
Bottom line
As the aviation industry anxiously awaits the news from Air India that it has finally made its would-be historical order, it also leaves space to wonder which airline will be next to order in bulk. While it is a fun game for spectators to watch and see which aircraft manufacturer scores more points, it's also a view into an airline's perspective when seeing the types of aircraft are chosen, and some insight into how aviation will look in the years to come.
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