The Hindu Business Line : Air India examining options to dry lease long range aircraft

Flight plan
To lease new aircraft for 7 to 12 years; older aircraft for 5 to 7years.
Boeing 787 deliveries slated to begin in late November/December 2008.

Our Bureau

New Delhi, Feb. 21 Air India has entered the market to dry lease long range aircraft. The airline is to choose from among the Boeing 747-400, Boeing 777-200 Extended Range (ER), Boeing 777-300 ER and the Boeing 777-200 Long Range aircraft apart from examining the Airbus A-330-200 and Airbus A340-300 aircraft.

Air India plans to lease new aircraft for 7 to 12 years while older aircraft are to be leased for 5 to 7 years.

The airline is also looking at the option of leasing the Boeing 787-8 aircraft, the production of which has been delayed. The aircraft was to initially enter global service towards the end of this year.

In December 2005, Air India ordered 27 Boeing 787 aircraft as part of a 68-Boeing aircraft deal. While delivery of other aircrafts that were part of the deal has started, the airline will receive the first Boeing 787 almost a year later originally planned.

hardening market

The global expansion plans of Air India could suffer a temporary setback with the US-based aircraft manufacturer, Boeing, announcing a six-month delay in the launch of the Boeing 787 aircraft, popularly called the ‘Dreamliner’. Delay in its delivery means that the airline would have to look for an alternative aircraft to operate flights between India and Japan.

Delays in the global launch of both the Airbus A-380 and now the Boeing 787 has led to the hardening of the global aircraft leasing market, affecting the plans of several airlines including Air India.

Assembly challenges

In a statement, Boeing said the delay in its planned initial deliveries of the Boeing 787 is due to continued challenges in completing assembly of the earlier airplanes. “Deliveries of the Boeing 787 are now slated to begin in late November or December 2008, versus an original target of May 2008. The first flight is now anticipated around the end of the first quarter of 2008,” the statement adds.

Air India, which was to receive the first of the 27 Boeing 787 aircraft in the third quarter of next year, was to be the third global airline, after All Nippon Airways, to be the launch customer.

The production delay was unlikely to result in any setback for the planned delivery for Jet Airways which is to receive the first of the 10 aircraft in 2011. Air India and Jet Airways are the only two airlines from India to order the aircraft.

Sources told Business Line that the delay could push back by six months the first delivery of this aircraft variety to Air India. “The initial few aircraft being delivered to Air India could get delayed. But as the programme moves ahead and Boeing scales up production, the delivery schedule could be back to what was originally planned. After all a small delay in the ground breaking project for a housing project does not mean that the entire housing complex work will be delayed ,” sources added.

The delay, however, could work to the advantage of Air India, as it is not uncommon for such contracts to have compensation for both the manufacturer and the airline in case either parties delays the deal. Boeing and Air India officials refused to comment on the compensation that might be paid.

In recent times, the European aircraft manufacturer, Airbus Industrie paid compensation to a number of airline including Kingfisher Airline for the delay of almost a year in the first Airbus A-380 entering service.