AI seeks 100 more planes to fly out of turbulence

Another 100 planes for Air India? You heard that right.
Even as the airline battles mounting losses, a turnaround plan already approved by its board of directors has allowed it to enhance its fleet to around 240 aeroplanes.

The plan, which looks at comprehensive ways to bring the loss-making carrier back into black, is yet to be approved by the civil aviation ministry.

According to official sources, the airline had initially suggested fleet enhancement on a much bigger scale — from the current 145 to 400.

“The airline management has an unreasonable demand. It says that the industry norm is 100-110 people per aircraft and since AI’s manpower is 40,000 permanent employees, its fleet size should be around 400 to arrive at that ratio. The management said unless fleet size reaches 400 aircraft, the airline cannot generate enough revenue to overcome losses. We don’t think this demand makes sense,” a ministry source said.

An airline official, however, denied making that claim. The earlier demand was to take the fleet above 280 aircraft, but the board agreed to 240, he said.

All the same, now with a board approval for an additional 100 planes, the airline will have its task cut out in figuring out a timeline for this significant fleet enhancement. Also, it has to decide how many of the new planes can be bought and how many taken on lease.

This decision on further fleet enhancement comes when the Comptroller and Auditor-General (CAG) is already criticising Air India on the earlier purchase of 111 planes, costing Rs 40,000 crore since 2006. The cost of each of the 43 Airbus A-320 family of aircraft and 68 Boeing aircraft ordered by Air India ranges from $37.34 million to $143 million.

The CAG is believed to have asked the airline and the government whether they could justify the massive order through a detailed business plan and give the reasons behind Air India’s dwindling market share, which has brought down its position to fourth, lower than the no-frills carrier IndiGo, Jet Airways and Kingfisher Airlines.

Meanwhile, in the turnaround plan prepared by global consultancy Deloitte, the carrier is preparing to seek Rs 17,500 crore support from the government, primarily through further equity infusion and guarantees on loans.