India’s national carrier, Air India once built by TATA Group returns to it’s stable after 69 years.
India’s national carrier, Air India, has been officially handed over to the TATA Group. TATA paid nearly $2.4bn after the government made the terms of the debt less onerous for the buyers. The handover draws curtain to years long attempt to sell Air India which has racked up losses to the tune of $9.5bn.
The Group may have to make higher investments in the range of $1 billion to make changes in the airline’s passenger reservation system, Cabin upgrade and refurbishment of it’s fleet for the purpose of meeting the requirements of the airline’s international operations.
Air India has a fleet of 141 aircraft, a mix of narrow and wide-body Airbus and Boeing aircraft. The airline has agreed to hand over only 118 of them in fly-worthy condition to the TATAs. It also faces a severe shortage of parts and engines for the 787 fleet. During the due diligence, the Tatas found that at any given time, there were at least five 787s lying unused due to the unavailability of engines.
There is expectation that the new owner has to freshen up the cabins, so as to update the product. The touchscreen inflight entertainment (IFE) system on the Boeing 777 aircraft needs attention, too, due to frequent complaints of breakdown. Seating change will also come along with IFE up-gradation. Panasonic will be providing better and upgraded systems. This is a major overhaul that requires four to six months and around $5 million per aircraft. Air India has 70 Airbus A320 type aircraft (A319, A320 and A321s), and it has promised to hand over 58 of them in fly-worthy condition. Grounded planes will be given on an as-is-where-is basis, and the airline has committed to maintaining all its serviceable aircraft so that there are no further groundings. 12 of the Airbus planes (A319s and A320s) have been grounded because their engines are due for maintenance. The TATAs will have to take a decision whether to continue with the A319 and older A320 aircraft or phase them out. The new generation aircraft (A320 Neos) are relatively fuel-efficient and are used by group airlines. The Overhaul cost of each CFM56 engine on the Airbus aircraft is huge and it will cost a fortune to make all the grounded planes ready for operations.
With TATAs now in the cockpit, a quick turnaround will be a reality to bring back it’s past glory in the global aviation industry.
