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Air India’s 777 woes stem from short-haul flights

Jan 30 2013, 03:35 IST
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SummaryAir India could make a costly mistake if it goes ahead and sells off five Boeing 777-200LR planes, even as there is no clarity on when it would be able to use the Boeing 787 Dreamliners again.

Air India could make a costly mistake if it goes ahead and sells off five Boeing 777-200LR planes, even as there is no clarity on when it would be able to use the Boeing 787 Dreamliners again.

Already, AI has been forced to revert to its nearly two-decade old jumbo jet fleet of Boeing 747-400s for some of the international routes, as five 777s are out of service.

The 777s were bought for over $200 million per plane in 2007 but six years later, the sale could fetch a maximum of $80-85 million. Sources said that a deal with Ukraine International Airlines has already been reached. But AI director finance S Venkat said, “We haven’t yet finalised the deal with anyone.” He did not clarify whether the the company will go ahead with the sale.

AI’s average fleet age of active aircraft is at around eight years, as per DGCA data and could go up to around nine if the 777-200s are sold off.

“Excess fuel bills because of operating Boeing 747s would increase AI’s fuel spend by nearly R20 crore a month compared with the time when we were on a 777-only fleet,” a senior AI finance official said. “Maintenance costs will also increase, I cannot quantify the increase as the tendering process is still on for repairs to some of the 747s’ bare fixed structure.”

Experts say that it was AI’s mismanagement in utilising its 777-200LR fleet led them to becoming unprofitable planes for the carrier.

“Boeing 777-200LR planes are only profitable above 2,500 nautical miles,” said Peter S Morrell of Cranfield University, UK and author of the book Airline Finance. “They are meant for long distance travel carrying a heavy payload (weight of passengers, baggage and belly cargo) and that is why the engines are big and thirsty.”

“Using them for short distances with fewer passengers will naturally render them unprofitable,” he said. “It is very important to acquire aircraft fleet that matches the airline's network plans and also to use the aircraft for the purpose they are built to keep routes profitable.”

The planes, dubbed Worldliner in aviation parlance, are the aircraft of choice for industry leaders Emirates and Qatar Airways. Both have won several accolades for their premium service, but they don't offer first class in Boeing 777-200LR flights, unlike AI. While AI carries 238 passengers in its 777 fleet, Emirates had 289 while Qatar had 259 seats.

“Unfortunately AI followed other

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