GoM approves compensation demand to be made from Boeing

A Group of Ministers (GoM) today approved the compensation demand to be made by Air India from US aircraft maker Boeing for a four-year delay in delivery of Boeing 787 Dreamliner planes.

"The GoM considered it and now we will send it to the CCEA (Cabinet Committee on Economic Affairs). ... It will be taken up whenever the next CCEA meeting is held," Civil Aviation Minister Ajit Singh told reporters after a meeting of the GoM headed by Home Minister P Chidambaram.

A meeting of the CCEA is likely to be held tomorrow.

The Minister refused to reply to queries on the amount of compensation to be paid by Boeing on grounds of confidentiality of the agreement between the aircraft manufacturer and the national carrier.

"Air India had negotiated a compensation package with Boeing because the planes were to be delivered in 2008, that is about four years delay.

"The earlier agreement was for a delay of six months and certain amount was agreed upon. That has been enhanced now," Singh said.

The GoM is understood to have looked at the terms of compensation and the amount to be paid by Boeing as per the latest agreement with Air India that was approved by its Board on May 28.

Deposing before a parliamentary committee, then AI CMD Arvind Jadhav had said, "We have slapped a compensation claim of USD 710 million. Obviously, they have confirmed USD 145 million they will pay as compensation for the delay..."  The Parliamentary report was made public in March 2010.

The Dreamliner aircraft, made out of composite materials, would be inducted by Air India only after the CCEA approves the compensation package.

Three of these planes, painted with Air India logo and livery, are ready to be flown to India. They are parked at Boeing factories in the US.

The national carrier had placed orders to buy 27 B-787s in 2005 and, as per the original schedule, the US aircraft manufacturer had to commence delivery of these aircraft from September 2008.

Delivery was delayed due to various factors, including labour trouble in Boeing and delays in getting parts from foreign suppliers.