Chaos clouds Boeing’s delivery of Air India 787s

Air India is expected to seek $1 billion from the Boeing Co. as compensation for the three-year delay of 787 production, and that might be delaying delivery of some of the first Dreamliners to the troubled carrier even further.

Air India seemed poised to receive its first 787 this week in Everett and also is expected soon to fly away with the first Dreamliner assembled in South Carolina, which was test-flown last week. But the Indian government, which has bailed out the airline, has taken up the issue of compensation for late delivery of 27 planes ordered in 2005.

Complicating matters, Air India’s pilot unions continue to squabble over who should fly the aircraft before it’s even in service, triggering cuts of flights and prompting more than 100 dismissals.

An Air India team was in the United States for the handover of the first plane, but that event will follow the Indian government giving final approval for a method of pursuing compensation for delivery delays, Civil Aviation Minister Ajit Singh said Tuesday. Air India plans to start using the jet with services to Melbourne, he said.

The fuel-efficient plane is about three years late because of production delays, which has prompted Air India to seek about $1 billion in compensation from Chicago-based Boeing. Singh said Tuesday a panel of ministers will discuss various options if the planemaker doesn’t agree to the claim.

Dinesh Keskar, senior vice president of sales for Boeing Commercial Airplanes in India and Asia Pacific, didn’t reply to requests for comment, nor did Air India spokesman G. Prasada Rao. The first 787 for Air India will be delivered from Everett, Wilson Chow, a company spokesman, said in an e-mail last week without elaboration.

But in an interview with the Post and Courier in Charleston, Keskar said: “All I can tell you is the airplane is ready for delivery. … I would not put a date right now because the date needs to come from the government. The Indian government will tell the airline, and the airline will tell us.”

Meantime, the introduction of the 787 has sparked protests as Air India has given training on the new aircraft to pilots who previously worked at Indian Airlines, the state-owned domestic operator that combined with Air India in 2007.

Travelers have suffered three weeks of disruptions because of protests rooted in a merger five years ago that left the state-owned airline with duplicate resources and warring unions. It has also caused losses, with the government this year agreeing to $5.4 billion of bailouts through 2020.

Pilots who worked at Air India before the merger say they should be the only ones to fly the aircraft because the planes were ordered before the combination. All the 43 Airbus SAS planes bought by Indian Airlines are operated by pilots from that company even after the merger, according to the Indian Pilots’ Guild, which represents about a third of Air India’s 1,500 current pilots.

Members of the union have called in sick since May 7, forcing the carrier to cut flights to Hong Kong, Osaka and Toronto. Domestic services have largely been unaffected. Minister Singh canceled plans to attend the 787 handover because of the pilots dispute.

The carrier sent 30 pilots each from Air India and the old Indian Airlines to Singapore for training on the 787, according to Singh. The company will have eight pilots for each Dreamliner, the first wide-body aircraft to join Air India’s fleet in more than two years. The plane will have 256 seats in a two-class configuration, according to a Boeing statement.

The Dreamliners were part of a wider fleet expansion plan that was meant to turn Air India into a major international carrier. The government combined the company with Indian Airlines to bolster its network and help it expand overseas.

Instead, the merger has left Air India mired in debt, struggling to integrate different businesses and weighed down by labor disputes. Last year, the carrier canceled more than 1,000 flights as former Indian Airlines’ pilots stayed away from work for 10 days to complain about being paid less than their colleagues from old Air India.

The carrier, once India’s biggest, has slipped to fourth- place behind newer private carriers, Jet Airways, IndiGo and SpiceJet, which have lower costs and fewer staff.

The 787s may help Air India start turning around its reputation, domestically and overseas, as the company is only the third or fourth carrier to receive one. All Nippon Airways got the first in September followed by Japan Airlines in March. United Airlines was to take delivery of its first 787 this week.

The Dreamliner marks a breakthrough as it’s the first aircraft to be built with a large plastic fuselage. That helps cut fuel usage as much as 20 percent and has allowed carriers to open new routes that were previously weren’t profitable with larger planes.

“The 787 will make a qualitative difference to Air India’s image and position,” said Harsh Vardhan, chairman of Starair Consulting, a New Delhi-based company that advises carriers. “But any strike creates a terrible damage to the brand value of an organization.”

“The induction of the 787 should have been a major and positive milestone,” said Binit Somaia, a Sydney-based director of CAPA Centre for Aviation, an industry consultant. “Instead, there is a possibility that the new plane may be temporarily grounded due to human-resources issues.”

Bloomberg News reported from New Delhi.

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