Air India negotiating for 'just compensation' for Boeing-787 delays

Air India negotiating for 'just compensation' for Boeing-787 delays

"We are in active negotiation with them (Boeing) for getting just compensation for the delay in deliveries," a senior Air India official told IANS from Mumbai.

Deliveries were to have begun in the October-December quarter of 2010 but due to technical glitches at the manufacturers end, the aircraft had to undergo another series of tests before it was certified to fly. In February, Boeing said deliveries would begin in the fourth quarter of 2011.

According to the official, the delay has caused both opportunity and operational losses to Air India, which had planned to deploy the B-787s on long-haul international routes and re-deploy its B-777 aircraft on domestic routes, thereby regaining its lost market share in both sectors.

"This plan of ours has been badly hit (due to the delay in deliveries). Once we have the planes, we can easily redeploy our larger seat-capacity aircraft on the domestic sector and offer more seats at lower prices, thereby shoring up our market share," the official explained.

The official further said that a committee formed under E.K. Bharat Bhushan, who heads the Directorate General of Civil Aviation, and which includes aviation ministry officials of joint secretary rank, is actively looking into the issue of delayed deliveries.

Boeing International Corporation India Pvt. Ltd., on its part, confirmed that a compensation package is on the anvil but did not divulge any value or range.

"We are in touch with Air India. They are our very valuable clients," Dinesh A. Keskar,
president of Boeing India and a vice president of the parent company, told IANS.

According to Boeing, the B-787 enables immense fuel-savings as well as greater seat capacity, coupled with the highest cargo capacity than any other aircraft in a comparable category.

The increased savings in operational cost and reduced maintenance outflows, says Boeing, is what Air India requires in its current situation.

"It will be a game-changer for Air India, which will also become one of the earliest operators of B-787s in the world," Keskar said.

The company further said that under an offset clause, around $1.7 billion is being re-invested in an MRO (maintenance repair and overhaul) facility in Nagpur.

Foreign companies are required to set aside a fixed sum from the contract for developing India's civil aviation sector through facilities like maintenance and training institutes.

Air India had ordered 68 aircraft from Boeing in 2006. Of these, 50 were for its own fleet and 18 for its low-cost subsidairy Air India Express that flies on short-haul international routes. Apart from the 27 B-787s, the other aircraft include a mix of B-777s and B-737s.

The 250-seater B-787 aircraft is made of composite materials. Its newly-developed engine and advanced flight technologies make it highly fuel-efficient. The plane can fly up to  16,000 km non-stop.

Boeing's order book for the B-787 worldwide currently stands at nearly 900 aircraft.