A crisis is brewing at Air-India in the aftermath of the US attacks on September 11. Close on the heels of reducing the frequency of its US bound flights by 20 per cent, the airline is now planning to temporarily discontinue three more services -- two weekly flights to Singapore, and the London terminator service, which was only recently re-introduced with much fanfare.
This saddles the national carrier with surplus aircraft capacity, a far cry from the acute fleet shortage that had existed just two weeks ago.
Compounding the problem, the contracts signed for the recent acquisition of four A-310s on dry lease have no termination clause, sources here said today.
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This means that the airline will have to honour the contract and find ways to utilise the four aircraft, which together cost Air-India $1 million a month, the officials told Business Standard.
This also puts a question mark over Air-India's plans to acquire two more A-310s and a Boeing 747-400 on dry lease in the future.
The dry lease contract for the four A-310s does not have any termination clause in favour of Air India, in spite of the Caribjet incident, wherein the airline ended up paying $23.6 million (Rs 107 crore) as damages for failing to honour the contract after an embarrassing legal battle, Air-India executives said.
The airlines had terminated a wetlease agreement with Caribjet in September 1996 owing to alleged safety violations. Caribjet then sent the dispute for arbitration, and the arbitrators upheld the Carbjet contention that Air India had wrongfully terminated the agreement in 1999. Subsequently, Air-India unsuccessfully appealed against the award on liability in a London court.
Senior airline officials confirmed that the London terminator and two Singapore flights would be discontinued, and that this would leave the airline with surplus capacity, but declined to give further details.
Following the decision to discontinue some flights to the US, Air-India is planning to re-deploy the Boeing 747-400s used on the US sector to increase services to the Gulf countries. Air India currently operates 19 weekly flights to Singapore, which will be reduced to 17 flights after two flights are suspended.