The Government has constituted a Group of Ministers headed by the Home Minister, Mr P. Chidambaram to look into the issue of compensation to Air India for delay in delivery of the 787 Dreamliner aircraft by Boeing. The GoM will look at the terms of compensation and the amount to be paid.

Official sources told Business Line that the first meeting of the panel was expected to be held next week. Air India is seeking compensation as delivery of the aircraft has been delayed by over three years.

Initially, the delay was on account of production problems that Boeing faced. At least three of the 27 aircraft that Air India was to take delivery of are ready but have not been brought into India due to the recent agitation by a section of pilots and the Government wanting to settle the compensation issue before accepting the aircraft.

A section of Air India pilots went on a nearly two-month strike to protest the management’s decision to allow pilots of the erstwhile Indian (Airlines) to be trained to fly the Dreamliner.

The exact compensation being sought by the airline has not been made public. Deposing before a Parliamentary Committee, the airlines’ former Chairman and Managing Director, Mr Arvind Jadhav, had said, “We have slapped a compensation claim of $710 million. Obviously, they have confirmed $145 million as compensation for the delay and so we have tried to push the entire delivery.” The Parliamentary report was made public in March 2010.

Earlier this week, the Union Civil Aviation Minister, Mr Ajit Singh, had told journalists in Bangalore that the issue of how much compensation Air India should seek from Boeing was likely to go before the Cabinet Committee on Economic Affairs in the next 10-15 days.

(This article was published on July 21, 2012)
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