Why did an Indian airline just place an order for 150 more 737 Max planes from a reeling Boeing? All because of 'sustainability'
After weeks of navigating yet another disaster related to its 737 Max aircraft, Boeing can share some good news. Low-budget Indian airline Akasa Air announced on Thursday an order of 150 Boeing 737 Max aircrafts, Boeing’s first order since a ripped fuselage on a 737 Max 9 model forced the emergency landing of an Alaskan Airlines flight on Jan. 5. Akasa Air’s order of 737 Max 10 and 737 Max 8-200 jets will be delivered over eight years and does not include any Max 9 aircraft.
Boeing has shed 15% of its market capitalization since the Jan. 5 failure—roughly $22 billion—starting the year with both a literal bang and a whimper. Akasa Air’s order of jets still represents a sorely needed boost for Boeing, though. Akasa Air will be banking on Boeing’s sustainable innovation to make a positive impression in India’s growing aviation market.
“The lower carbon emissions of the 737 Max family allow us to remain focused on sustainable operations, while also providing our environmentally conscious passengers with a more comfortable way to fly,” Akasa Air CEO and founder Vinay Dube said in a press release.
The ordered 737 Max jets will reduce fuel use and carbon emissions by 20% and produce 50% less noise compared to older generations of planes, according to Boeing.
The addition of 150 Boeing planes will more than double Akasa Air’s fleet to 226 aircraft. Launched in 2022, Akasa Air makes up 4% of India’s market, according to India’s Directorate General of Civil Aviation.
Aircraft sustainability efforts have flourished in the past few years. While Boeing’s efforts have attracted Akasa Air, it may not be enough to distinguish themselves from rival Airbus, which forms a global “duopoly,” as noted by Bank of America Research.
Everyone wants to be more sustainable
International Air Transport Association member airlines passed the Fly Net Zero resolution in October 2021, committing to reach net zero carbon status by 2050. Aircraft manufacturers have invested in sustainable aviation fuel made from non-petroleum feedstocks, lighter-weight parts and electric- and hydrogen-powered aircrafts to reduce carbon emissions.
Boeing bought 5.6 million gallons of blended SAF to support commercial operations, according to its 2023 Sustainability Report, compared to 2 million for 2022 operations. Boeing subsidiary Wisk invested $450 million in an electric, autonomous, four-passenger air taxi in January 2022.
Airbus announced on Tuesday the successful powering on of their iron pod, a “hydrogen-propulsion system designed for Airbus’ electric concept aircraft,” the foundation of Airbus’ four hydrogen-powered concepts, including a fully electric aircraft, announced in 2020. Like Boeing, Airbus is expanding the use of SAF. Airbus updated its older commercial model family of the A320ceo to the A320neo in 2010, claiming that the A320neo models are able to use a 50% SAF blend. The company hopes to use 100% SAF for the models by 2030, as does Boeing. Airbus spokesperson Kristi Tucker said they hope to have a hydrogen-powered plane in service by 2035.
Boeing and Airbus share similar struggles
James Darcy, aviation consultant, former head of communications of Airbus for the Americas and member of the National Aeronautic Association’s Sustainability Advisory Committee, told Fortune that one challenge airline companies face when ordering more sustainable aircrafts is the time it takes for the planes to be delivered, saying that both Boeing and Airbus have 10-year backlogs. “Airlines are having to make decisions today based on what’s available that will influence their fleet composition 10 years from now,” he said. As supply chain delays have hampered aircraft production, manufacturing has been unable to keep up with advancing sustainable technologies.
A Boeing spokesperson did not disclose when the 737 Max aircraft would be delivered to Akasa Air.
While manufacturers are making long-term investments in hydrogen-propulsion systems and electric airplanes, airlines have to settle for purchasing aircrafts that use SAF to reduce carbon emissions gradually.
Akasa Air may have drawn to Boeing’s sustainability mission, but Darcy said the Boeing 737 Max is just as sustainable as Airbus’ A320neo.
“You’re not going to have a big competitive differentiator one way or another in the current generation on the sustainability front,” Darcy said. “Those decisions are more likely going to come down to things like cost to operate, cost to own and overall reliability. It’s an interesting choice given the current headlines on the Max aircraft.”
Akasa Air did not respond to Fortune’s request for comment.
