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Air India's Boeing Compensation Demand Unrealistic

Blame Boeing all you like, the real fault lies at Air India?s door.
Air india, COMMENT, Business Trends

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There isn’t a 787 customer who couldn’t have made (or saved) millions had the airplane arrived into their fleets on time. As it is, the 787 is and has been delayed and there’s no changing that fact. Since the Air India merger with Indian Airlines in 2007, the newly formed National Aviation Company of India Limited (NACIL) has struggled to either coalesce the two firms together and has been slow to change its business in the wake of falling business and high yield traffic.

After placing the biggest order in the history of Indian aviation in late 2005, Air India has inducted a number of 777-200LR and 777-300ERs and has been negotiating with Boeing to cancel the last three 777-300ERs it has on order.

Air India claims the 787s could have saved them money yet they have not deployed the 777-200LRs or 777-300ERs, arguably the most efficient widebody jets in service today, effectively enough to reap the rewards of their multi-billion dollar investments. There is nothing to suggest the 787s would have been any better when yield attrition would have eroded all the fuel burn savings the airplane has.

India has been struggling to cope with massive overcapacity on its domestic network and its airlines are simply too laden with red tape, political interference and apathy to move towards efficient operations and compete against foreign airlines coming into the country. If Air India gets anywhere near the reported $840m in damages they seek, it serves only to highlight how badly run the airline is – granted, not as bad as Kingfisher Airlines who can’t even afford to fuel their jets, but still bad nonetheless.

And to think, Air India still has another three 777-300ERs to be delivered – there are airlines like Emirates who can’t get enough of these fuel efficient airplanes and here we have Air India wanting to cancel orders yet with the same tongue complain about how badly it has been affected by the absence of the 787.

The irony of this will not be lost on Boeing.

Many airlines are entitled to claim for the delays on the 787, but to accuse Boeing of being somehow responsible (directly or indirectly) for any business woes just goes to show the lengths many will go so that they can avoid being blamed for their own inadequacies.

Boeing has admitted time and again it has gotten things wrong on the 787. Its high time Air India realised it has no one else to blame but itself for its poor performance.

This column was written by FBE Aerospace analyst Saj Ahmad, the views expressed are his own.

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