Air India will lose its first-mover advantage if it cancels its order for 27 Boeing 787 planes, as the waiting period for new orders is upto 10 years, said an aviation industry source.
AI will receive its first Boeing 787 plane by the year-end, while the first ever Boeing 787 Dreamliner will be delivered to Japan's All Nippon Airways next week.
The fate of the Air India-Boeing deal hangs in balance till the government clears the purchase. Last week, the Air India board referred the proposal to acquire Boeing 787s to the Finance Minister Pranab Mukherjee-led Empowered Group of Ministers.
Earlier last week, Civil Aviation Minister Vayalar Ravi had said AI does not have the money to buy new planes, fuelling speculations that the airline will cancel or defer the order.
The national carrier has been saddled with Rs 40,000 crore debt and was unable to pay salary to its employees on time. The minister's statement came in the wake of the Comptroller and Auditor General questioning the government's decision to buy the planes and burdening the airline with additional debt. According to media reports, the government may even halve the order and opt to induct only 14 planes or defer some of the deliveries.
“Air India does not have a medium haul aircraft which it can use to connect West Asia, South Europe, Far East and Tokyo. Air India had 20 airbus A-310 planes and the Boeing 787 is a replacement for them. The B-787 has a range of 13 hours, burns less fuel, carries 50 percent more cargo. Its a brand new plane and will have less maintenance.That makes it attractive for Air India. Since its a new plane Air India will be able to charge premium on its fares and yields will be higher,” said an aviation industry source.
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“Jet Airways will get deliveries of its Boeing 787 in 2014. The waiting period for new orders is nine-ten years.” Jet has ordered 10 Boeing 787 aircraft. In addition, Jet Airways and Spicejet have 69 Boeing 737s on order. The backlog of deliveries of Boeing 737, 777 and 787 to airlines in India is over 100 and will be cleared over the next five years.
“Any new generation aircraft will add value to the airline and help attracting passengers. The question is how to utilise and market it. In the past Air India has not shown great acumen in those two things,” said an industry expert.
Cancellation of the Dreamliner deal, however, will be fraught with implications not restricted to Air India alone. The order for 27 Boeing 787s is a part of an order of 68 planes which AI made in 2005. The deal size is around Rs 38,000 crore. As a part of the deal Boeing agreed to certain offsets, investments, training of AI crew and construction of MRO in Nagpur. The total offsets from civil and defence purchase deals is around USD 4 billion dollars and the plane manufacturer has been working with Indian corporate and public sector companies such as Hindustan Aeronautics Limited, Tatas, Wipro, Infosys and HCL. For instance manufactures flaperon, an aircraft component, used in Boeing 777 and Tatas are manufacturing floor beams for the Boeing 787 plane.