The government may still be in two minds over whether to cancel or prune the order of 27 Boeing 787 Dreamliners for Air India, but the aviation major is continuing efforts to hardsell the aircraft.
Boeing India president Dinesh Keskar on Wednesday went to the extent of saying that financial turnaround for the ailing national carrier would be difficult unless it completes the deliveries of the Dreamliner. The first plane is scheduled to arrive in India in the last quarter of 2011, more than three years behind schedule.
“If the 27 Dreamliner order is withdrawn, Air India will find it hard to do a turnaround.....this aircraft requires little maintenance and has very low operational cost. Its operational cost is 20% lower,” Keskar said.
The Dreamliner is scheduled to make a test flight in India next week.
The Dreamliner order was placed along with the order for other aircraft (total 111 planes) by Air India in 2005, totalling upwards of Rs45,000 crore. It has been mired in controversy from the beginning — first because deliveries were delayed for over three years and now because a high powered committee headed by special secretary in the finance ministry Vilasini Ramachandran is yet to take a view on the fate of the order. Many top officials in the Government want the order to be either cancelled or cut down.
Air India is reeling under debt and is in no financial position to pay for new aircraft. When this was pointed out to Keskar, he said the airline has restructured debt so that a part of it is financed by the US Exim Bank “at less than 3% interest”.
The question: Is lower interest rate on loan repayment enough to purchase new aircraft when the airline is unable to service payment of debt for the remaining aircraft order?
According to Amber Dubey, director (aerospace & defence) at KPMG, “Air India should take a very prudent call on the size of this order. They should base their decision on traffic projections and market share aspirations”.
Another analyst tracking the aviation sector said there was no sense for AI to go ahead with such a large 787 order. An industry expert pointed out that not only should the order be pruned, but AI needs to improve utilisation of its existing fleet before thinking of adding such an expensive asset to its fleet.
Then, the issue of compensation for delayed Dreamliner delivery also remains contentious. Air India has been seeking at least half a billion dollar in compensaton. The Vilasini Ramachandran committee will also look into the issue of compensation.
The 787 Dreamliner comes in two versions — 787-800 and 787-900. The first version is the base model of the 787
family, with a flying range of 14,200-15,200 km, depending on seating configuration. It seats 210 passengers in a three-class configuration. The second version can fly 14,800-15,750 km. It can seat 250-290 passengers in a three-class configuration.
Making out a case for 787’s importance for Air India, Keskar also mentioned that at present, the airline’s fleet needs something between a 777 (777 300-ERs — seats about 350) and the single aisle 150-200 seater aircraft it currently flies. Possibly, AI may use the Dreamliner for non-stop 12-hour flights from Indian destinations to Melbourne, etc.
Apart from Air India, Jet Airways is the only other Indian carrier which has placed orders for Dreamliners (10 aircraft), for which deliveries would begin only in 2014. The launch customer for the aircraft is All Nippon Airways with the largest number of 50 Dreamliners on order.
India sales forecast raised
Boeing has raised its sales forecast for passenger planes in India to 1,320 planes through 2030 for as much as $150 billion. In August the company had forecast India would need 1,150 passenger planes worth $130 billion until 2030. Air traffic grew almost 18% during January-May this year and is compelling carriers to raise capacity. Low-cost carrier Go Airlines last month ordered 72 Airbus A320neo aircraft with a catalog price of about $7 billion. That followed the record order for 180 A320 planes with a list price of $15.6 billion announced in January by IndiGo, India’s largest budget carrier by market share. In July last year SpiceJet placed a $2.7 billion order for 30 Boeing 737-800 planes, which will be delivered from 2014 through 2019.
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