European giant Airbus said Wednesday it had signed a draft deal to sell 250 of its next-generation A320neo planes to India’s IndiGo, in what could be its biggest contract ever in terms of aircraft numbers.
The low-cost Indian operator is already a loyal Airbus customer, having previously ordered 280 planes from the European firm, and the latest agreement is worth around $25 billion (20 billion euros) at list prices.
If completed, “the agreement will become Airbus’ single largest order by number of aircraft,” the group said in a statement.
Like in many countries in Asia, India’s air passenger market has expanded at breakneck speed and looks set to continue to swell as the fast-growing middle class spends its cash.
Air trips per person each year in India currently stand at just 0.07, far behind developed countries such as the United States with 2.49 air trips annually.
Airbus, its arch-rival Boeing and Brazil’s Embraer — in their 20-year forecasts for the industry — have all said the Asia Pacific regions as a whole is the key market to enter because of the burgeoning middle class.
And international tourism in the region is also booming — visitor arrivals from abroad grew 6.0 percent to 248 million last year, the strongest of any region worldwide, according to the UN World Tourism Organisation.
IndiGo, India’s largest passenger carrier, is the sole airline among the four biggest currently operating in the country to report profits consistently.
“This new order reaffirms IndiGo’s commitment to the long-term development of affordable air transportation in India and overseas,” airline president Aditya Ghosh said in a statement.
Smaller passenger planes are increasingly in demand around Asia as budget carriers expand their reach to less prominent cities.
And unlike its traditional A320 plane, the “neo” aircraft is designed to consume 15 percent less fuel, a significant selling point for airlines in the cut-throat medium-haul sector.
It boasts aerodynamic improvements including little curved winglets, trimmed weight and more efficient engines.
Airbus says its current version of the A320 family, which also includes the smaller A319 and bigger A321, has 60 percent of the global medium-haul market, ahead of US rival Boeing with its 737 aircraft.
“The A320neo continues to dominate world market share and this commitment confirms the A320 family as the aircraft of choice in the most dynamic aviation growth markets,” Fabrice Bregier, Airbus chief executive, said in the statement.
The European firm says that to date, it has almost 11,000 orders of A320 family planes and over 6,200 aircraft have been delivered to 400 customers and operators worldwide.
However Airbus is trailing Boeing this year, having taken in just 791 net orders for aircraft in the first nine months of the year, compared to 1,000 for its US mega-rival, although if finalised this year the IndiGo deal could push it into the lead.