Air India

September 24, 2014 - 9:46am

Controversy continues to swirl in India over whether excessive spending by Air India on a fleet acquisition order in 2006 has led to its present financial difficulties. The clamor follows a book by former Comptroller Auditor General (CAG) Vinod Rai titled The Diary of the Nation’s Conscience Keeper-Not Just an Accountant. The CAG acts as an independent authority established by the constitution of India to audit the expenditures of the government of India and its corporations.

An airline with revenues of $1.2 billion was asked to take on a debt of $8.2 billion [including pre-existing debt],” said Rai during a recent television interview. He credited former aviation minister Praful Patel for having ‘nudged’ Air India to increase the Boeing order from the original 28 to 68 denied the allegation. The government has given the airline a $5 billion equity infusion until 2021.

Air India’s order consisted of 111 aircraft—43 Airbus A320- seriesfamily jets and 68 Boeings, including eight 777-200LRs, fifteen 777-300ERs, eighteen 737-800s and twenty-seven27 787-8s.

Air India has been sliding—there is no doubt about itprobably [because of] certain decisions thatwhich were forced [upon it]…it has been pushed [into]…buying and selling of aircraft,” Indian aviation minister Ashok Gajapathi Raju Pasupati said at a recently held press conference. “This does not appear to have been done with a commercial plan in mind.”

Air India has also drawn criticism for selling five newly bought 777-200LRs. “When any purchase has a debt portion of 97 percent, there’s no way it can be commercially viable,” said Rai. “Within five years of the 777s being bought, they had to be sold to Etihad for the price of one…at one-fifth of the price.”

Still, according to former Air India senior official Shakti Lumba, unforeseen market forces contributed to the 777s’ withdrawal.

In all fairness, Air India was never able to use these aircraft to full capacity as the market went down,” he told AIN. “However, the carrier got value for its money as the remaining loan is now being paid by Etihad.” Besides, he explained, the order got placed before the merger of Indian Airlines and Air India, and both airlines listed individual requirements. “The main culprits of Air India’s poor dispatch reliability were the 777s and 787s, with their constant breakdowns,” Lumba added.

Air India has already taken delivery of 17 of 27 Dreamliners. It expects the final delivery by 2016. On whether Air India appears headed toward divestment, Pasupati said no decision hasd been taken. “I do not want to stir a hornet’s nest,” he added.

 

 

July 11, 2014 - 6:30am

With India’s airlines still mired in losses, the country’s new budget, announced on July 11, did little to address some of the aviation industry’s most pressing concerns. It offered nothing on reforms in taxation on aviation fuel and maintenance, repair and overhaul—long issues of contention the aviation industry hoped India’s new government would address.

May 8, 2014 - 2:23pm

SriLankan Airlines appears poised to expand its reach into the neighboring Indian air transport market after becoming the 14th member of One World alliance late last month. The move is a boost to a country trying to bounce back after a 25-year civil war and also makes SriLankan the first carrier from the Indian subcontinent to gain admission into a global airline alliance—ahead of rival operators in the far larger Indian market.

February 12, 2014 - 3:44am

India’s newest domestic startup, full-service Delhi-based Tata SIA Airlines, could have an advantage over newcomer budget-carrier AirAsia India as the latter is forced to wait for its air operators permit (AOP), which has been delayed by the decision of the Indian Directorate General of Civil Aviation (DGCA) to issue a public notice requesting comments. This could put on hiatus AirAsia’s plans of launching before summer.

January 10, 2014 - 12:19pm

The Star Alliance has set a new target of 2015 for Air India to join its ranks following a unanimous vote by member airlines to restart the process of integrating the Indian flag carrier. The alliance suspended integration in 2011 on grounds that Air India had “not met minimum joining conditions agreed in December 2007.” With signs of stability and fleet rationalization, however, Star has agreed to give Air India a second chance.

June 18, 2013 - 10:30am
787

Air India’s seventh GEnx-1B-powered Boeing 787 of the 27 ordered is taking flight at the flying display here at the Paris Air Show. The airline will take delivery of this 787 next month, and a total of eight by the end of this year, five in 2014, six in 2015 and two in 2016. A Qatar Airways 787, which flew at the Farnborough Air Show last year, is also on static display here.

May 20, 2013 - 9:10am

A major restructuring at Air India has cut loss-making routes to 25 percent of its network in the fiscal year ending March 2013, down from 69 percent in the previous year. The airline attributes the improvement to a series of steps taken to cut costs, restructure loans, strengthen management and liquidate assets, including the spin-off of engineering and ground handling as independent profit centers.

April 1, 2013 - 6:00pm

India’s long-awaited new civil aviation policy needs to address key issues on infrastructure and high taxation, according to Tony Tyler, director general and CEO of the International Air Transport Association (IATA). Speaking at the annual India Aviation Day in New Delhi on March 26, he urged the country’s government to produce a coordinated policy framework for aviation that all relevant departments, including the ministries for finance, economy, development, rural infrastructure and tourism, can pursue.

February 18, 2013 - 4:15pm

India’s fastest growing and most successful airline–budget carrier IndiGo–has become the first victim of an October ruling by the country’s aircraft acquisition committee governing the number and kind of aircraft imported by airlines to encourage regional connectivity to smaller towns. In November the committee, led by civil aviation minister Ajit Singh, cleared for import only five of the 16 Airbus A320-series aircraft Indigo wanted to acquire.

December 10, 2012 - 12:00pm

As India’s general aviation sector limps back to life after temporary stagnation, Middle East companies have been reaping the results of its tax-infused, straight-laced policy on maintenance, repair and overhaul (MRO).

 
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