Air India's Compensation for 787 Delay could be Price Reduction

Saturday, 9th June 2012 at 05:21am

Air India is expecting as much as $1 billion compensation for the delayed delivery of the 787 aircraft it purchased from Boeing. According to an official of the Civil Aviation Ministry, such compensation will likely come in the form of price reduction, and also discounts on the airline's future purchases from the company, could there be any.

While no one knows the exact figure, Ajit Singh had already confirmed that the compensation has already been agreed upon by the aircraft manufacturer and the Air India board. The latter, nevertheless, is currently making legal consultations on how everything should work. An anonymous government official told Aviation Week that the compensation can be around $1 billion, which is now waiting to be approved by the Cabinet Committee on Economic Affairs, through a panel of several ministers. Officials from Boeing did not make any comments regarding this.

The ministry officials are in the process of studying the amount Boeing should rightfully pay Air India, and also the options applicable should the former refuses to pay. Air India is expecting to receive their orders this month, so it can use the aircraft for its flights to London in August and to Australia in September. But Singh clarified that before those flights, the aircraft will be initially used on domestic operations to allow pilots to adjust and practice.

The 787, supposedly, should have been delivered four years ago, in 2008. After the failed delivery on that year, Boeing promised to deliver the aircraft this year. The government of India agreed that they will still accept these orders on the condition that Boeing will provide compensation for their delay.

By: Pete Lee.