Airbus Defence light and medium transport aircraft are cash cows, but production is ramped down. However, India will order a significant number of these aircraft and possibly in total 150 aircraft in the near future in joint ventures with Indian companies. Airbus will thus get a major foothold in the Indian defence market, which is the largest defence importer in the world

Airbus Defence’s light and medium transport aircraft are cash cows. However, production is being ramped down because the order book is emptying out. India is in the final phase of ordering a substantial order of about 25% of all C295 aircraft produced with an upside of up to 150 aircraft. The majority will be manufactured in India and Airbus will get a major foothold in India. Strategically this means that all major markets have an Airbus industrial presence. This will give Airbus political and economic leverage in India.


Airbus is one of the largest aerospace manufacturers in the world. Airbus's main activity is airliner manufacturing and has smaller Helicopter and Defence & Space divisions.

Light And Medium Military Transport/Mission Aircraft

In 2018 Airbus Defence and Space had $6.3B revenue from military aircraft. One of the lesser known aircraft are the light and medium transport aircraft which originate from one of the founder-companies of Airbus: Spanish CASA.

These aircraft don’t get a lot of attention, not even from Airbus itself. The annual reports barely mention them. But more importantly, they are also not named in the risks. The light and medium transport aircraft are a cash cow for Airbus Defence and Space.

The CN235 and C295 (with a stretched airframe) are the workhorses of tactical military transport, conducting logistical missions including the transport and delivery of personnel and cargo as well as medical evacuations. The aircraft are offered in varied versions and configurations beyond the traditional airlift version. For example, maritime patrol and anti-submarine warfare, airborne early warning and control, firefighting and intelligence surveillance reconnaissance [ISR], etc.

One of the key selling points is Airbus modular approach, such as the Fully Integrated Tactical System. Specialised equipment can usually be installed in modules in the cargo bay, thus being able to switch configurations when needed.

A new interesting configuration is the tanker configuration with a palletised air-to-air refuelling unit and associated computer control system. The system is intended for refuelling turboprop aircraft, helicopters, and eventually unmanned aerial vehicles.

Operating and acquisition costs are also much lower than competitors. Compared with Leonardo's C-27 Spartan operating costs are 30-40% cheaper and in the maritime patrol version 75% cheaper per operating hour than Boeing's (BA) P-8 Poseidon.

Customer relationships with armed forces are characterised by their long term, strategic nature and long decision-making cycles. Once a contract is signed, its life span including considerable services business often amounts to decades. The customer base is increasingly global where it is displacing older competitors such as Russian Antonovs, older Lockheed Martin C130s and other small/medium transport aircraft.

The C295 is a versatile aircraft that has been proven popular with its customers. Existing customers often buy extra aircraft, but the long decision-making cycles also create a risk. The production line has been ramped down as the order book empties!

Indian Gambit

India is the largest defence importer in the world as it doesn’t have a strong defence industry. In Lockheed Martin: India Tailwinds this is analysed in more detail. Although Airbus has exported about $2B to India, it is not one of the significant players. But this is changing and it could become much larger than expected.

Airbus is very close to finalising a big C295 order for 56 (or 62) aircraft worth $1.7B for the Indian Air Force. This would almost double all sales since 2000 (as can be seen in India Tailwinds)

“The extensive trials and Contract Negotiations Committee (CNC) are over now. The Defence Acquisition Council (DAC) this month will take up the project to approve certain deviations before sending it to the cabinet committee on security for the final nod” according to the Times of India.

16 will be produced by Airbus (which is about 1 year of production) and the other 40 (or 46) will be assembled by a TATA Airbus joint venture. The order will replace the 58 HS748 from BAE Systems still in use. It is odd however that these are replaced almost one on one since the C295 is larger.

The Indian Air Force is also a large operator of the An-32. A joint-venture with Russia to develop and produce a Medium Transport Aircraft was stopped very early in development. The C295 would be a logical successor to replace the An-32. There is some confusion about the order. The initial request was to replace the HS748, but Airbus CEO Dirk Hoke specifically mentions the Medium Transport Aircraft and 62 C295 aircraft.

So India has the potential to buy up to 150 C295 aircraft. Included could also be the tanker-version of the C295, but also the lucrative maritime patrol aircraft (at $107M per aircraft) This would also almost double the number of C295s already produced! But ‘Made in India’ and technology transfer are requirements.

Importance For Airbus’s Global Strategy

For Airbus’s long-term strategy it would be a great success to add India to its manufacturing base. Airbus already produces and assembles aircraft in China (A320 airliner) and the US (A320 airliner) apart from its home base in Europe (France, Germany, Spain and the UK). With the inclusion of India this is political and economic influence in all of the most important markets in the world. Producing military aircraft in India would be a good match and will not bite the present airliner assembly in China and the US. These countries have strong defence industries and will buy locally produced military aircraft.

“For Airbus, India already takes a centre-stage role in our international activities and we want to further increase its contribution to our products. We are fully geared to support the Indian government’s efforts to develop and strengthen the country’s aerospace, engineering, and production capabilities and take our partnership to new heights. In defence, our proposition is to develop a focused industrial ecosystem in the country with our partners at the heart of it. However, much of this will depend on the contracts. There is a huge demand for defence helicopters and airplanes from the Indian military and security forces that can be served by some of our products.” according to Airbus Defence and Space CEO Dirk Hoke.

This foothold in India is important for Airbus. Apart from the potential defence sales the political and economic leverage in India will add to Airbus’s global strategy thus, increasing its robustness and continuity in the long term.