The government on Friday gave a go-ahead to Air India to induct the much-awaited Boeing 787 Dreamliners into its fleet but would conduct separate negotiations on the issue of compensation for failure of the aircraft to meet performance guarantees.
New Delhi: The government on Friday gave a go-ahead to Air India to induct the much-awaited Boeing 787 Dreamliners into its fleet but would conduct separate negotiations on the issue of compensation for failure of the aircraft to meet performance guarantees.
The Cabinet Committee on Economic Affairs approved the proposal of Civil Aviation Ministry, at a meeting this evening, and allowed Air India to take delivery of 27 Boeing 787 aircraft after signing the Delay Compensation Settlement Agreement, an official release said.
The issue relating to compensation for failure to meet performance guarantees has been delinked from the Delay Compensation Settlement Agreement, which shall be negotiated separately by an Empowered Group of Officers after actual evaluation of the performance of the delivered B-787s, the release said.
These aircraft were scheduled to be delivered between September 2008 and October 2011, but due to certain design and production issues the deliveries were delayed.
Now, these planes are scheduled to be delivered by March, 2016.
While the Empowered Group of Officers would negotiate the performance standards of the Dreamliners separately, the Law and Justice Ministry would examine and endorse the enabling legal provisions and aspects of the negotiations, the release said.
Three of these latest long-haul planes, painted with Air India logo and livery, are ready to be flown to India from Boeing plants in the US. The list price of the Boeing 787 is about USD 190 million although what an individual airline pays varies in terms of the order.
With their induction, Air India plans to expand its international operations soon, including mounting new non-stop flights to Australian destinations.
However, the plane would be flown for the first few weeks on domestic sectors to help the already-trained pilots to further train themselves on landings and take-offs of this next-generation flying machine that is made out of composite materials. The aircraft is billed by Boeing to be more fuel efficient than all other planes.
The orders for 27 Dreamliners were part of the overall order placed by Air India in 2005 for 68 Boeing aircraft. The total deal at that time was worth about USD 8.1 billion.
Two months after Air India Board finalised the compensation agreement with Boeing for a four-year delay in the planes' delivery, a Group of Ministers, headed by then Home Minister P Chidambaram, on July 25 gave its nod to it and sent it to the CCEA for approval.
The government and the airline refused to reply to queries on the amount of compensation to be paid by Boeing on grounds of confidentiality of the agreement.
Deposing before a parliamentary committee in 2009, the then AI CMD Arvind Jadhav had said, "We have slapped a compensation claim of USD 710 million. Obviously, they have confirmed USD 145 million they will pay as compensation for the delay."
The report was made public in March 2010.
Aviation analysts say that the compensation amount to be paid is decided after taking into account the delay as well as the amount of revenue that the airline would have generated if the new aircraft had joined the fleet as scheduled.
Like other global airlines seeking compensation from Boeing for the delay in delivery of the new aircraft, Air India would not get the compensation fund in hand. Instead the compensation amount is likely to be adjusted against future deliveries that have to be made to the airline.