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New Delhi, March 18

The Air India's Chairman and Managing Director, Mr Arvind Jadhav, has blamed Boeing's inability to deliver the Boeing 787 as one of the factors for the airline's poor financial performance.

In the deposition he made before the Parliamentary Committee on Public Undertakings (COPU), he said that not operating the Boeing 787 was one of the main reasons for the losses.

“If you ask me today do you want B 787, I have to say that I want the 787… I am not able to run profitably now on Gulf areas because I am using the smaller aircraft where I can use a larger aircraft. I am not able to run the Bangkok-Shanghai, Bangkok-Tokyo and other routes where the B 787 can work beautifully...” he said.

He also said that a 787 would have given around four times as much return as the 777.

“The internal rate of return for the 787 is around 12.6 per cent. For the 777, it is 2.6 per cent”

Air India has around 15 Boeing 777s and has placed orders for 27 Boeing 787s. There has been a delay in the delivery of the latter. Air India has claimed $710 million in compensation from Boeing. Boeing has agreed so far to pay $145 million.

Could Air India have chosen some other aircraft, such as the Airbus 340?, COPU asked NACIL.

NACIL, in a written reply, said, “…the Airbus A-340 was evaluated under the category of Ultra Long Range (ULR) and Medium Capacity Long Range (MCLR-A) aircraft and the corresponding models considered were A340-500 and A340-600. The corresponding Boeing aircraft models were the B 777-200 LR in the ULR category and B 777-300 ER in MCLR-A category. The fuel efficiency of the B 787 aircraft was found to be better than that of the competitor A330-200 by 17 per cent.”

This is the first time that someone is officially blaming the fleet for the huge losses that the airline is incurring. Until now, reasons such as merger between Air India and Indian Airlines, high fuel costs, falling passenger yields and poor management were cited.

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(This article was published in the Business Line print edition dated March 19, 2010)
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