On a wind-swept chilly day in July 2007 at the Boeing plant in Seattle, the then Chairman and Managing Director of Air India (AI) V. Thulasidas was an excited man.

He was part of a team, which included Raghu Menon (who would eventually take over as Chairman from Thulasidas) and several senior airline officials, that was in the US to take delivery of the first of the 68 new Boeing aircraft that Air India had ordered.

The order, worth Rs 35,000 crore then, included eight Boeing 777-200 Long Range (LR) aircraft.

Hours before the first Boeing 777-200 LR aircraft left Seattle to undertake a 14-hour non-stop flight to Delhi, Thulasidas told the media that the airline had decided to mount additional fuel tanks on the last two Boeing 777-200 LR aircraft, helping them to fly non-stop between Bangalore and San Francisco carrying 238 passengers in first, business and economy classes.

Five years later, Thulasidas’s dream of flying the Boeing 777-200 LR aircraft to the US West Coast will be fulfilled, but not by the Maharaja. Instead, Etihad Airways will be flying these aircraft on the long-haul route. Last week, Etihad announced that it was acquiring five of AI’s eight Boeing 777-200 LR aircraft and will be using them to launch services to Los Angeles.

Why didn’t Air India use these aircraft for flights to the US West Coast and why did it have to sell them five years after they were inducted?

According to Kapil Kaul, CEO, Centre for Asia Pacific Aviation, the Boeing 777-200 LR had been a huge financial burden on Air India.

“Unless you are able to drive the premium on long-haul routes by selling first/business class successfully and consistently from both ends, such routes can be disastrous. AI has clear challenges in attracting front-end traffic. The cost of aircraft immobilisation and crew for such long sectors is huge. Not many, except Gulf carriers, can fly long-haul sectors, as it is not feasible,” he says.

Concurring with Kaul’s views, an analyst adds that besides not having enough passengers in the first and business class, it was the increasing price of oil and the range of the aircraft that might have worked against Air India.

These people may have a point. Air India withdrew the non-stop service between Mumbai and New York because it was losing too much money. Incidentally, the first of the Boeing 777-200 LR aircraft was delivered in July 2007, and the last in August 2009, according to a deposition made by Air India officials to a Parliamentary Committee.

Speaking to Business Line from Oman, Thulasidas, now retired, justified the purchase, pointing out that on the non-stop New York flight, passengers reach early in the morning rather than late in the day without having to go through the trouble of having to clear security at an intermediary point.

“First and business class passengers on these flights can have a shower at the airport and go for their business meetings and even travel back the same evening to Mumbai and Delhi, thereby saving on hotel costs and time. I know some passengers who do this,” Thulasidas added.

Thulasidas still maintains that with the eight aircraft that Air India had ordered, the airline could have launched a service to the US West Coast, too.

“Preferably from South India, may be combining Chennai and Bangalore or with good domestic connectivity from all Southern States to the embarkation point,” he points out.

The former CMD adds that Air India had also thought of a connection from one or two cities in the East or West of India to the non-stop service to the US from Mumbai and Delhi – as Emirates or Singapore Airlines do carrying passengers from India to connect on their long-haul flights.

Clearly, Air India has not been able to capitalise on aspects that the Gulf carriers or even Singapore Airlines have managed to use to their advantage.

Instead, the airline is now concentrating its energies on deploying the Boeing 787 aircraft, which have now entered its fleet on new routes, such as the soon to be launched flights to Milan, Rome and Moscow, apart from consolidating recently launched routes, such as Melbourne and Sydney to return to profitability.

Perhaps this move will work better than the 777-200 LR aircraft did for Air India. This is probably something which a former Air India CMD hinted at when he told the Parliamentary Committee that the entire project of acquiring new aircraft was profitable only if a Boeing 787 aircraft operated along with a Boeing 777 aircraft.

Of course, how successfully Air India uses this mix of aircraft still remains to be seen.


(This article was published on October 13, 2013)
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