Air India unveiled deals on Tuesday for a record 470 jets from Airbus and Boeing, striking the largest ever deal by one airline after months of tough, secret talks.
Confidentiality was lifted on Tuesday as leaders hailed the accord in a diplomatic embrace between leading G20 nations.
Discussions on the deal were held a stone’s throw from Britain’s Buckingham Palace and culminated in a celebration over coastal Indian curries, people involved in the talks said.
The record aircraft deal, which India’s state broadcaster said was worth $80 billion, has put the Tata Group-owned airline in the league of aspiring global carriers.
US President Joe Biden said in a statement the “historic agreement” will create “over one million American jobs”.
The deal was in the making for over a year, insiders said, recounting details of the process on condition of anonymity.
A ‘classic bake-off’
Serious talks between the airlines began last summer, with the epicentre of dealmaking being St James’ Court – a luxury Victorian hotel near Buckingham Palace in London’s West End.
In the hothouse atmosphere of a classic aircraft industry negotiating ritual known as a “bake-off”, negotiators from the airline, planemakers and engine giants camped out at the Tata-owned hotel and neighbouring suites for days at a stretch.
They were chasing a bigger slice of a fast-growing market that has seen many airline growth plans rise and fall.
The contest for attention played out across London on a chilly day in December as Airbus found itself in talks with Air India on one side of the capital, while fighting Qatar Airways in court over the fate of similar A350 jets just two miles away.
Airbus and Qatar Airways later settled their contractual and safety row. But Air India jumped ahead of Qatar in the queue for smaller jets. Sources say the Gulf airline also won hefty damages.
‘Methodical, tough, sophisticated’
Negotiations were led by Air India’s chief commercial and transformation officer, Nipun Aggarwal, and Yogesh Agarwal, head of aircraft acquisitions.
Discussions often stretched into the night with sellers churning out new “best offers” fuelled by room service.
“Air India negotiated hard and the team is very sharp despite having no prior aviation experience. They compare with some of the best dealmakers in the business,” one person said.
A second person who watched the billions fall into place said the Air India negotiators were “methodical, tough and very sophisticated”.
The London negotiations ended days before Christmas, with a dinner at the hotel’s Michelin-starred Indian restaurant Quilon. The eatery is renowned for its seafood and coastal cuisine from places like Goa and Kerala.
Convergence of political will and ambition
The deal gave Boeing a chance to restore its position in India’s single-aisle jet market and narrow Airbus’ large lead. Airbus, meanwhile, wanted a bigger piece of the wide-body market led by its rival.
With bulging order books, neither could sweep the whole order.
At stake was India’s bid to win back the custom of visitors and its own diaspora from highly efficient Gulf carriers. Politics set the context but talks were commercial – and tough.
“The convergence of the political will of the country to regain sovereignty of international connectivity, combined with the ambition of the mighty Tata … if things are done right it has all the ingredients to be really solid,” Airbus chief commercial officer Christian Scherer said on Tuesday.
Analysts caution many obstacles remain to Air India’s plans. It needs better service and efficiency to make a serious dent in the powerfully entrenched hubs of Doha and Dubai.
But the potential of India — soon to be the world’s most populated country — will continue to lure dealmakers.
- Reuters, with additional editing by Vishakha Saxena