Wednesday, February 15, 2023

How covert London negotiations resulted in Air India's massive plane deal;

How secret London talks led to Air India's gigantic plane order

 BENGALURU/PARIS: The Tata Group-owned airline Air India is now in the top tier of aspiring global carriers thanks to its record aircraft deal.

It tentatively agreed on Tuesday to acquire nearly 500 Airbus and Boeing jets in order to compete with domestic and international rivals.

According to people who were involved in the talks, it took months of secret negotiations that took place a stone's throw from Britain's Buckingham Palace and culminated in a celebration over coastal Indian curries.

On Tuesday, leaders from leading G20 nations came together in a diplomatic embrace to praise the agreement. Six paragraphs were provided by Tata Group, which regained control of Air India last year after decades of public ownership.

Along with the publicity-shy IndiGo founders, its low-key announcement demonstrates a growing class of private airline owners transforming the financially risky Indian airline industry.

On condition of anonymity, insiders claimed that the transaction had been in the works for more than a year.

Serious discussions began in the summer and continued until outlines were agreed upon just before Christmas. Reuters reported in December that the parties were getting close to a record 500-plane agreement as the deal's astonishing scale began to emerge.

St. James' Court, a posh Victorian hotel in London's West End that was close to Buckingham Palace, served as the epicenter of deal-making.

Negotiators from the airline, planemakers, and engine giants camped out at the Tata-owned hotel and adjacent suites for days in the hothouse atmosphere of a traditional negotiating ritual known as a "bake-off."

They were trying to get a bigger piece of a market that was expanding quickly and has seen many airline growth plans fail and succeed.

Now, Boeing had a chance to reclaim its lead over Airbus in the single-aisle jet market in India and close the gap. Airbus desired a larger share of the wide-body market that its rival controlled. Both were unable to sweep the entire order due to overflowing order books.

India's attempt to reclaim visitors' and its own diaspora's business from highly efficient Gulf carriers was in jeopardy. The context was set by politics, but the talks were tough and businesslike.

"If things are done right, it has all the ingredients to be really solid," Airbus Chief Commercial Officer Christian Scherer told Reuters on Tuesday. "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."

"Methodical, tough" On a cold December day, Airbus found itself in talks with Air India on one side of the capital, and fighting Qatar Airways in court over the fate of similar A350 jets just two miles away. The competition for attention played out across London.

Air India jumped ahead of Qatar in the queue for smaller jets, despite sources claiming that the Gulf airline also won substantial damages. Airbus and Qatar Airways later settled their contractual and safety dispute.

Nipun Aggarwal, Air India's chief commercial and transformation officer, and Yogesh Agarwal, head of aircraft acquisitions, were in charge of the negotiations, which frequently extended into the night as room service provided sellers with new "best offers."

"Despite having no prior aviation experience, Air India negotiated with a lot of effort, and the team is very sharp. One person stated, "They compare with some of the best dealmakers in the business."

The Air India negotiators were described as "methodical, tough, and very sophisticated" by a second individual who was present as the billions of dollars were settled.

Dinner at the hotel's Indian restaurant Quilon, which has been awarded a Michelin star for its seafood and coastal cuisine from Goa and Kerala, marked the end of the negotiations in London.

Engines are frequently crucial and can either speed up or slow down a larger deal in any jet deal, despite the fact that the battle between plane manufacturers is the primary focus. As engine talks continued, plans for announcements on the anniversary of Tata's acquisition of Air India fell through.

According to insiders, General Electric takes home the majority of lucrative engine deals, beating Raytheon-owned rival Pratt & Whitney on the Airbus A320neos with its CFM joint venture with Safran. The sale of forty Airbus A350s also helped Rolls-Royce.

Catch Daily Highlights In Your Email

* indicates required

Post Top Ad