The Telegraph
Since 1st March, 1999
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Air-India decides to buy 28 aircraft
- Board approves Rs 10,000-cr purchase plan

Mumbai, Nov. 8: The Air-India board today approved a plan to buy 28 aircraft from Airbus and Boeing Company at a cost of Rs 10,000 crore.

According to the fleet expansion plan, Air-India will acquire 10 long range and 18 short range aircraft, director (public relations) Jeetendra Bhargava said.

The long range aircraft is Airbus 340 while the 18 others are Boeing 737-800s, he said. The new planes would be powered by CFM engines.

The corporation will now send its fleet acquisition plan to the ministry of civil aviation.

The new aircraft would be acquired over a period of five years and would replace the existing 14 planes that the corporation has taken on dry lease. These include 11 Airbus 310s and three Boeing 747-200s.

Airbus and Boeing had run a mega campaign to bag the orders that aviation analysts say even involved the governments of the countries where the two aircraft manufacturers are based.

In the post 9/11 depression in the aviation industry, several airline majors have cancelled orders. This has heightened the competition between the two aircraft manufacturers — Europe-based Airbus and Seattle-based Boeing Company.

Airbus hopes to snatch pole position from Boeing as the world's leading aircraft manufacturer this year with 300 deliveries against its competitor’s 280.

The Air-India decision has intrigued aviation industry watchers. They expected the orders to be placed with one manufacturer instead of two. This they feel adds a new twist to the battle between Airbus and Boeing to capture the Indian market.

International air travel to and from India has a huge potential, industry sources feel. They expect it to grow 7 per cent as Indian tourist traffic to foreign destinations is growing by leaps and bounds. The growth is attributed to foreign exchange relaxations and burgeoning middle class wealth. India is also being perceived as unlocking itself as a tourism destination.

The new planes will allow the flag carrier to reach more destinations in Europe and the U.S, Bhargava said.

The Rs 10,000-crore fleet acquisition project cost involves the purchase of technical infrastructure like training stimulators as well as training of pilots, Bhargava said.

The Airbus A340 has 272 seats, including 10 first class, 27 executive class and 235 economy class seats while the boeing 737-800 has 146 seats, including eight executive class and 138 economy class seats. At present, the country’s flagship carrier has a fleet of 33 aircraft. These are 19 airbus 310s, nine Boeing 747-400s including three on dry lease, two boeing 747-300s and three boeing 747-200s.

Air-India’s fleet acquisition plan would be 85 per cent funded through financing from the Exim Bank of the US in the case of Boeing and European Credit agency for the Airbus aircraft.

The remaining 15 per cent would be a commercial loan, Bhargava said, adding the acquisition process would start as soon as the government gives the go-ahead.

VRS to be extended

The board also decided to extend its ongoing voluntary retirement scheme from non-operational staffers to those in operational areas (including pilots and engineers), Bhargava said.

Air-India has a total strength of 15,650 employees including about 6000 in the operational area, and the existing VRS has been accepted by 250 staffers since February 2003.

The Air-India board has also set up a committee to look into the possibilities of starting a low-cost carrier, Bhargava said.

“We are looking at a low-cost carrier at greater detail for which a committee has been set up today,” he said but declined to give details.

The country's flagship carrier had planned to operate a low-cost carrier this year from Kochi as Air-India Charters Ltd but it was put off due to opposition from the employees’ union.

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