If Dreamliners don’t take to the skies soon,
AI’s finances may be hit further
The grounding of Boeing 787 Dreamliners could not have come at a worse
time for Air India. If the technologically most advanced aircraft, described as
the game changer for the airline, do not take to the skies at the earliest, it
could mean financial implications for AI, which is struggling to work its way
out of a financial mess.
The six Dreamliner aircraft were deployed to operate on middle-haul
routes, under nine hours, to replace AI’s ageing fleet of Boeing 777s and
A-320. The Dreamliner is the mainstay of AI’s plans to not only fly on
long-haul routes but also cut down on costs, thanks to the fuel efficiency of
the state-of-the-art aircraft
Air India has already made known its ambitions to focus on new markets
like West Asia, South-East Asia and Europe. Among the other destinations lined
up are China, Australia, Vietnam, Italy and Spain, where it would like to
operate and ensure a major inflow of revenue in the next three or four years.
Africa is also another lucrative market where no Indian carrier is operating
and which is emerging as a hub of economic activity.
According to AI, replacing 777s with 787s will save 25 per cent of the
cost, while substituting 787s for the short-haul A-320 will lead to 50 per cent
saving.
The grounded Boeing 787s are said to be consuming 20 per cent less fuel
than competing aircraft, and their maintenance cost is also 26 per cent lower.
In AI, there is a mismatch between the kind of aircraft used and the sectors in
which in which they are flying, resulting in a high cost of operation per
revenue km, almost 50 per cent more than what is incurred by its rivals. For AI
to break even, a higher passenger load factor is required.
The airline has deployed long-haul Boeing 777s on middle-haul routes,
including to Tokyo, London, Seoul and Shanghai. Due to the delay in the
delivery of the Dreamliners, AI pushed into service 20 new 777s it had just
received. The 777 is typically a long-haul aircraft optimised for flights of
over 15 hours, about 112 tonnes heavier than a Dreamliner, consumes more fuel
and is patently unsuitable for middle-haul routes. On the other hand, the
Dreamliner is made of composite materials. Its newly-developed engine and
advanced flight technologies make it highly fuel-efficient. The plane can fly
up to 16,000 km non-stop.
AI’s turnaround plan rests on its regaining the market share in those
segments where this aircraft is suited to fly — South East Asia, West Asia,
Africa, Europe and London. The airline already has permission to fly to
Melbourne but does not have an aircraft to fly there. With the Dreamliner, it
can fly non-stop to Melbourne from Delhi and can even link Chennai to
Melbourne, with a direct flight. The Chinese market is also not well connected.
The Central Asian market, which includes Kazakhstan and Uzbekistan, has a
strong business potential but is completely off the AI radar.
The Dreamliner has also large cargo capacity. As AI has already prepared
plans for a separate cargo business, the new aircraft would play a key role in
enhancing revenues.
Of the 27 Boeing 787s ordered in a mega deal in 2006, the airline has so
far received six aircraft. It is supposed to get seven more in 2013, five in
2014, six in 2015 and the remaining three in 2016. The airline has been
operating these aircraft from Delhi to Bangalore, Chennai, Dubai, Paris and
Frankfurt.
· Replacing
777s and A-320s with 787s will save cost for airline
· AI’s
turnaround rests on regaining market share in segments where Dreamliner is
suited to fly
http://www.thehindu.com/todays-paper/tp-national/will-air-indias-fortunes-soar-or-remain-grounded/article4321777.ece
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