IA can cut fleet buying costs, says Boeing

US-based aircraft manufacturer Boeing Inc has told Indian Airlines that the fleet acquisition cost can be reduced by several hundred crores of rupees. Boeing's response comes after IA extended the bids for aircraft acquisition on September 30 by another six months.

The Indian Airlines board of directors had in March, 2002 approved the acquisition of 43 aircraft of the Airbus A-320, A-319 and A-321 models.

The total cost was estimated to be Rs 10,089 crore. The Pre-PIB (public investment board) meeting on the fleet acquisition took place in June this year. The ministry of civil aviation is likely to submit a proposal to the PIB soon.

Official sources said Boeing had demonstrated a potential cost saving citing current market situation and an enhancement in technology. The savings could be in the region of Rs 500 crore or above, they said.

Boeing has already written a letter to IA to this effect. Rival Airbus Industries has extended its bid for another six months but has not brought to the table any price negotiation offer till now.

Sources said that Boeing has drawn the airline's attention to the introduction of the winglet technology which was developed only after 2001 when the company had bid for the deal. This technology helped in reducing the fuel burn requirement and also cut maintenance costs. The technology is available on Boeing 737-700, 800 and 900 series.

Besides this, Boeing has also said that post September 11, aircraft prices have dropped substantially and there was no significant recovery in the market. The validity of bids for the 43 aircraft acquisition ended on September 30.

This is the second time that IA has sought an extension of bids. Airline executives said that a fleet expansion was a must for the carrier to contain the drop in market share.