Boeing to compensate Air India for delay in aircraft delivery

Air India (AI) may not have received its Boeing 787 yet, but it will receive the delay compensation, confirmed the aircraft manufacturer. As the aircraft delivery has been delayed by three years, AI has demanded a penalty of over half a billion dollars.

The 27 Boeing 787 Dreamliners ordered by AI in 2005 were to be delivered by 2008. But due to problems at Boeing’s production unit they haven’t been delivered yet. This has cost the airline a potential revenue of $1.5 billion. “We are going to pay them the penalty and are talking with them to workout the amount,” said Dinesh Keskar, president of Boeing, India.

“We are not only seeking compensation for the delay in delivery, but also opportunity cost for lost business opportunities,” said the AI spokesperson. “We are still in the negotiation stage,” he said.

In 2005, AI had placed an order for 68 aircraft — 18 B737-800 planes, 27 Dreamliners (B787-800) and 23 B777 aircraft.
Boeing said it will deliver 18 aircraft by the end of this quarter to AI.

“We have increased the rate of production to 42 aircraft a month and AI is our priority,” said Keskar. He said that B787 will help AI in its turnaround plan. “It will bring down the fuel cost by 20% and is environment-friendly. We are in the process of shipping simulators for these planes to India, and AI will not have to send its pilots for training to Singapore.”