The Hindu Business Line : Boeing writes to IA, stresses `saving' aspect

THE US aircraft manufacturing major, Boeing Commercial Airplanes, has written to Indian Airlines (IA) outlining the "large saving" of more than Rs 700 crore that could be available to the airline if it were to go in for Boeing 737 aircraft.

The airline proposes to acquire 43 aircraft from Airbus Industries, a competitor to Boeing at a cost of more than Rs 10,000 crore. The letter from Boeing comes just days before the now postponed crucial Public Investment Board (PIB) meeting. The meeting was earlier scheduled to be held on January 29.

The communication points to the fact that the reduction in prices by Boeing has been made possible through a combination of improved pricing for the aircraft and the incorporation of efficient blended winglets.

The latest communication also calls on IA to take advantage of "dramatic changes" in the market place for commercial aircraft that have occurred since December 2001, when the airline was examining bids from both aircraft and engine manufacturers for its aircraft acquisition plan.

The airline board had in April 2002, approved a proposal to acquire 43-Airbus aircraft including 20 172-seater Airbus 321aircraft at an estimated cost of Rs 10,089 crore. Besides, IA planned to acquire 19 Airbus A-319 which can seat 122 people and four Airbus A-320 aircraft which can accommodate 145 passengers.

Interestingly, Air India (AI) in November last year decided to acquire 18 Boeing 737-800 aircraft. The Boeing 737-800 aircraft is one of the aircraft being offered by the aircraft manufacturer to IA.

While the pre-PIB meet had approved the project towards the middle of last year, the PIB meet was being considered crucial to push the project forward.

Industry analysts however, maintain that the decision to acquire the 43-Airbus aircraft was the best at that time and added that any change will result in huge additional cost for the airline.

After the Board decision in 2002, Airbus officials had told Business Line that the D3 effect of demand-driven despatch among the 43-aircraft would allow IA to change at the last minute the type of aircraft being operated on a particular sector should demand increase or decrease. This, officials indicated will help the airline report better financials.