Three planes are put up for sale, what’s cooking at Air India?

Air India flight. (Image Source: Shutterstock)

Two important things happened on the six-month anniversary of the Tata group taking over Air India. First came the announcement that the appointment of Campbell Wilson, the Chief Executive Officer, has been cleared by the Home Ministry. The mandatory process was a foregone conclusion, but was in focus considering the fiasco with the previous appointment of Ilker Ayci. Secondly, the airline came up with a tender for sale of all three B777-200LR aircraft in its fleet.

There have been continuous reports of Air India finalising an order for the A350. A Business Standard report has indicated that the airline has already appointed a chief pilot for the A350.

What is on sale?

The tender released by Air India states that three aircraft, registered VT-ALF (named Jharkhand), VT-ALG (named Kerala) and VT-ALH (named Maharashtra), have been put up for sale. All three are 2009 vintage, having seen 13 years of service with the airline. The airline plans to sell them on “as-is” basis along with the engines. The tender document was published on the airline’s website.The aircraft are configured with 8 first class seats, 35 business and 195 economy class seats. The aircraft have been extensively used on routes to North America with VT-ALH having 4,158 flight cycles and VT-ALF completing 5,820 flight cycles at the beginning of July. A flight cycle denotes one flight from engine start-up to shutdown. The total flying hours range from 37,236 for VT-ALH up to 46,011 hours for VT-ALF.This is the first major decision on the fleet side for the airline after its transfer to the Tata group and gives us a lot of indications on where it is headed from here.

Air India puts VT-ALF (named Jharkhand), VT-ALG (named Kerala) and VT-ALH (named Maharashtra) up for sale.

The airline has 16 B777s in its fleet with 13 being the B777-300ER and the rest being the -200LR variant. These aircraft were part of a larger deal with Boeing. Interestingly, five aircraft of the same type were sold to Etihad in 2013. That deal had been under the scrutiny of the Comptroller and Auditor General of India for the sale of the aircraft at prices lower than market value. Four of these five aircraft have already been parted out of spares. Subsequently, two B777-300ER were converted to government aircraft to be used by the President and Prime Minister.

Where are these deployed?

The three B777-200LRs help service the 10 weekly flights Air India operates between New Delhi and San Francisco. This have been one of the super-hit routes of Air India and has seen one of the Middle Eastern carriers reduce frequency to San Francisco after Air India launched the non-stop flights. Although United Airlines launched flights from San Francisco to Delhi, Air India has been able to hold on to the market.

Then what is the challenge?

The B777-200LRs are known as gas guzzlers. Compared to the modern-day B789 Dreamliner, which United operates on the route, the operating cost is at least 20% higher for Air India. While route economics are not available in the public domain, operating the -200LRs it could mean a swing from loss to profit or lack of opportunity to clock more profits.

Fleet induction? 

The sale process started on July 27. Considering Air India’s hold on the market, it is unlikely that the airline would let go of the route. This puts the focus on fleet acquisition. There has been a lot of talk on the A350s destined for Aeroflot being available immediately. Turkish Airlines has already taken the lead and snapped up a couple of planes which have started flying with it.

The challenge of such a last-minute decision is that one may not have the flexibility to change the configuration. It involves time and one may not always be sure of the inventory of seats of choice being available. For example, the aircraft destined for Aeroflot have private doors for the business class seats. Inducting such aircraft and not maintaining that for future inductions could lead to product mismatch.

This puts the focus on another contender, the B789 Dreamliner. Air India operates a sizable number of B788s. These aircraft help service destinations from Australia to the US. Will it make sense to push out one subtype from the fleet and add another subtype? Operating cost-wise, it probably will. The 789s fly longer than the 788s in terms of range. While Vistara has two of these in its fleet, since they do not have the crew bunk area, they cannot make the trip non-stop to the US.

But there is a catch The US Federal Aviation Administration has stopped deliveries of all Dreamliners from Boeing. The order has been in place for a long time to ensure that quality issues at Boeing are addressed and each airframe checked before any new deliveries can take place. But there are quite a few airlines already operating the Dreamliners and are looking to resize themselves due to the pandemic, offering Boeing an opportunity to send out the relatively older aircraft to other airlines. Is this where the Air India planes will come from?