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Ashwini Phadnis

New Delhi , March 31

Air India is to soon invite bids from public and private sector insurance companies to finalise the insurance cover for its fleet of about 50 aircraft for the year 2006-07.

"The bid documents will lay down various technical parameters including a stringent clause on the net worth of the company, what credit rating it enjoys and ability to repay," senior airline officials told Business Line. The airline insurance cover expires on June 30 this year. Sources indicated that almost 90 per cent of the risk is insured overseas through reinsurance arrangements with the remaining cover being picked up domestically. The fleet value of the 50 aircraft is likely to be in excess of $3 billion, sources indicated.

This will be the second consecutive year that the airlines will be seeking bids from both public and private sector insurance companies. In the recent past, the airlines has seen a dip in the insurance premium that it has been paying.

During 2003, the airline witnessed a sharp 25 per cent drop in the insurance premium at $11.6 million or about Rs 55 crore, down from close to $13 million that it paid during the previous year. Similarly, the following year there was a decline of 20 per cent in the insurance payout.

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