Government Orders A Revisit Of Air India's Boeing Purchases

Friday, 8th May 2015 at 02:25am

The Indian government vows to revisit Air India's orders consisting of 27 Boeing 787 jets delivered in tranches since the third quarter of 2012. The revisit is part of government's attempts at reviving the government-owned airline.

So far, about 70 percent of Air India's order has been fulfilled, thus only the remaining 30 percent, approximately 7 Boeing jets, will be subject to review.

Government decided to review the remaining undelivered jets after representatives from the office of the Prime Minister demanded a report containing the airline's past performance accompanied by its turnaround strategies.

The airline officials said that they had grand plans for the 787 Boeing fleet also called the Dreamliners. However, some of these plans failed as load targets were not met.

Earlier, Air India had forecasted a passenger load factor or PLF of around 80 percent for this fleet. Unfortunately, the actual PLF for all international flight routes only reached a 70 percent.

Some flight routes failed to boost overall targets and had in fact contributed to losses amounting to R360 crore. The Delhi-Moscow and Delhi-Sydney-Melbourne flight routes had registered losses of R60 crore and R300 crore respectively.

It appears that Air India might have failed to draw up appropriate flight plans and groundwork before purchasing the Dreamliners.

Early this year, Air India reportedly discussed with Boeing the possibility of upgrading the remaining undelivered jets in terms of size and capacity. However, experts noted that such upgrading is unnecessary, given that the airline are many points away from its targeted PLFs.

Moreover, upgrading meant coughing out more cash.

Meanwhile, government is disturbed by the way Air India has been handling the Dreamliner project especially so that it was supposed to help resuscitate the ailing company.

The administration is now preparing to revisit the project and has created a panel of 5 members tasked to look into the matter.

By: Pete Lee.