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Finding no buyers, Air India scraps its plan to sell 777s

Source : BUSINESS_STANDARD
Last Updated: Fri, Nov 16, 2012 19:50 hrs
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Air India has scrapped a plan to sell five Boeing 777s, as it couldn't find any buyers for these. The carrier had planned to sell two Boeing 777 200-LR (long range) aircraft and three Boeing 777 300-ER (extended range) aircraft. A senior aviation ministry official said now, Air India was considering reconfiguring these aircraft (changing the number of seats in each class) to deploy the Boeing 777-200 LR on the Saudi Arabia route and the B777-300 ER on the North America route.

"We were recording huge losses on most routes in which 777s are deployed. As these planes are owned by Air India, we have no option but to reconfigure and operate them on the Gulf and North America routes. Even redeploying the 777s won't generate operational profit for us. But right now, Air India's intention is to minimise losses by altering the seat configuration," the official said.

Air India had also approached Boeing to sell these planes, but to no avail, the official added.

Airline experts say the problem with Air India 777s is their seat configuration and the fact that these aircraft were fuel guzzlers.

Though Boeing 777s are the mainstay of the Dubai-based Emirates airline (of its fleet size of 189 aircraft, 89 are Boeing 777 200 LR and 777 300 ER), the carrier is recording profits. According to data on the Emirates websites, its 777s have both 290, as well as 346, seats---a two-class configuration.

Many international airlines operating 777s are recording good profits, as healthy passenger load factors (PLFs) on business- and first-class seats help them shore up yields. However, Air India's performance has been dismal---its PLFs in the business and first classes were below 30 per cent. This is despite the fact that it has fewer seats than its competitors. The PLF of major international carriers in these classes is about 50 per cent.

With Air India replacing the 777-200 LR aircraft with the Boeing 787 (which is more fuel-efficient than the 777) on the Delhi-Frankfurt route, it is now recording profits on this route, said an airline executive. It is expected Air India would deploy the Boeing 787 on the Mumbai-London route soon. The airline had brought the Dreamliner (about 25 per cent more fuel-efficient compared to jets like the Boeing 777) to deploy these on medium-haul routes.

Experts believe with Air India deciding against selling the Boeing 777 aircraft, the mismatch between the types of aircraft it has and the routes these are deployed in would continue. The airline flies the Boeing 777-200 LR, a long-range aircraft optimised to fly for more than 15 hours without a stop, to middle-haul destinations that take less than 10 hours to reach, including Frankfurt, Paris, Hong Kong and Shanghai.

An airline official said to break even on these routes on a 777-200, Air India would need PLF of 90 per cent. This is because the Boeing 777 is a fuel-guzzler and weighs 112 tonnes more than a Dreamliner.

With 30 wide-bodied aircraft in its fleet, Air India owns 20 Boeing 777s. It is expected 27 Boeing 787s would be delivered by 2016. This year, six Dreamliners are slated to be delivered to the airline.

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