India/middle east : Air India B787 order hanging in balance

Air India’s order for 27 of Boeing’s new Dreamliner 787 aircraft is hanging in the balance while the government mulls over the purchase after the Air India (AI) board referred the proposal to acquire the B787s to the country’s Finance Minister in mid-September.


Air India’s


India/middle east : Air India B787 order hanging in balance

Air India’s order for 27 of Boeing’s new Dreamliner 787 aircraft is hanging in the balance while the government mulls over the purchase after the Air India (AI) board referred the proposal to acquire the B787s to the country’s Finance Minister in mid-September. Earlier, Civil Aviation Minister Vayalar Ravi had said AI does not have the money to buy new planes, fuelling speculation that the airline will cancel or defer the order. The first B787 was scheduled for delivery to AI by year-end. The national carrier is saddled with mounting debt and has even struggled to pay its employees’ salaries on time. The minister’s statement came in the wake of the Comptroller and Auditor General questioning the government’s decision to buy the planes and burdening the airline with additional debt. According to media reports, the government may even halve the order and opt to induct only 14 planes or defer some of the deliveries. “Air India does not have a medium haul aircraft which it can use to connect West Asia, South Europe, Far East and Tokyo,” said an unnamed aviation industry analyst in a Business Standard report. “Air India had 20 airbus A310 planes and the B787 is a replacement for them. The B787 has a range of 13 hours, burns less fuel, carries 50 per cent more cargo. It’s a brand new plane and will have less maintenance. That makes it attractive for Air India. Since it’s a new plane Air India will be able to charge premium on its fares and yields will be higher,” said the analyst. Jet Airways has also ordered 10 B787 aircraft with the first deliveries from 2014. New orders for the B787 are estimated for delivery in nine-ten years. The report noted that cancellation of the Dreamliner deal will be fraught with potential problems. The order for 27 Boeing 787s is a part of an order of 68 planes which AI made in 2005. As a part of the deal Boeing agreed to certain offsets, investments, training of AI crew and construction of MRO in Nagpur. The total offsets from civil and defence purchase deals is around US$4 billion and the plane manufacturer has been working with Indian corporate and public sector companies such as Hindustan Aeronautics Limited, Tatas, Wipro, Infosys and HCL.