A new worry for India’s airlines — planes ready to be delivered

(Image: News18)

The decision of IndiGo, India’s largest airline, last week that it would continue to take delivery of new aircraft and balance it by returning the older A320ceo despite the current situation, raised many eyebrows. Air traffic has plummeted to new lows and recovery isn’t in sight yet, but IndiGo is trying hard to keep costs low.

From grounding of over 650 aircraft on March 25 to excess planes with airlines currently, airlines have come a long way in two months.

The move by some airlines from India to place record orders with both Airbus and Boeing will now haunt them because of the coronavirus lockdown. IndiGo, GoAir, Vistara and Spicejet have aircraft on order with Airbus and Boeing. While Air India does not have any aircraft on order, AirAsia India has not placed any order with any manufacturer directly with all its aircraft leased, a few coming in from its parent in Malaysia and other group subsidiaries and the rest coming in from open market lease.

IndiGo has 332 A320neo on order along with 398 A321neo, some of which are the A321XLR – which is yet to have its first flight. With over 100 A320neos already in fleet and 17 A321neo in fleet, the airline has a backlog of 600+ aircraft. The Wadias-backed Go Air had ordered 144 A320neos in two tranches of which the airline has taken delivery of 43 aircraft, with a hundred more yet to be delivered.

The TATA-SIA joint venture Vistara had placed orders for 50 A320neo family with Airbus and six B787-9 Dreamliners with Boeing. While the IndiGo and Go Air orders were placed directly with Airbus, Vistara had a mix with 13 A320neo being placed with Airbus and the rest including all the A321neos coming from the lessor.

Where are the customers?

SpiceJet had placed an order of up to 205 B737 MAX8 aircraft which includes confirmed orders and options. The airline took delivery of its first B737 MAX8 in September 2018. With two unfortunate crashes of the aircraft and subsequent grounding, Spicejet had to ground all its 13 aircraft which were delivered until March 2019, when the global grounding was initiated. While Spicejet has aircraft ready and waiting for delivery, the aircraft can only be re-delivered when the re-certification of the B737MAX8 is completed by regulators worldwide.

While Spicejet re-delivered two aircraft which were on their scheduled way out, no airline has taken delivery of any aircraft since the end of March when the lockdown began in India. Taking delivery of an aircraft is an elaborate process and in current times when the international commercial flights are on hold, airlines wouldn’t be able to send its crew and teams to complete the process.

The three airlines IndiGo, Vistara and Go Air together have around 25 aircraft which are ready for delivery. As country after country went into a lockdown, Airbus announced e-Delivery process for airlines in April. This involves Technical Acceptance Completion tasks delegated to Airbus or anybody else appointed by the airline, electronic Transfer of Title and ferry-flight to customer’s base done by Airbus. While most of the activities are performed digitally, the fact is that the aircraft has to be ferried to the customer’s base and this requires crew to fly to one of the delivery centres; Hamburg or Toulouse for the A320 means deliveries are stuck due to lack of commercial international flights.

Blessing in disguise?

Boeing decided to stop production of the B737MAX series in January this year. This was more to do with the lack of space to park any more aircraft as the grounding continued. Repeated deadlines to get the airplane back in the air were missed as one or other problem kept surfacing for the B737MAX. The Boeing factory has suspended all operations due to COVID-19 and is only limping back to normalcy.

Airbus was grappling with supply chain issues at Hamburg, where the A321neo is manufactured, leading to delays in delivery. As COVID-19 swept across Europe, Airbus shut production at both its plants – Hamburg and Toulouse for a limited period. Had it not been for the closures of production line, there could have been more aircraft ready and waiting to be delivered to airlines in India.

Tail Note

With the Indian government allowing limited domestic flights, international charters and businesses to re-open, it is a matter of time that the government also allows ferry-out and ferry-in of brand new aircraft. In the last few months, there also is a possibility that airlines would have seen the end of lease for few airframes in their fleet and lessor would want to have the aircraft back in their custody.

However, it is not as simple as it sounds with a lot of rules in place from country to country and the possibility of the crew who flies to either take delivery or re-delivery the aircraft being quarantined or at risk.

IndiGo started inducting planes with two A321neo landing in India this morning. Interestingly, one was accounted for as part of the fleet in the investor presentation showing fleet at the end of Q4 of last financial year, indicating that the airplane was physically away but already in the fleet.

Ameya Joshi runs the aviation analysis website Network Thoughts.