Etihad may take more planes from Air India

New Delhi: Abu Dhabi-based Etihad Airways PJSC has approached Air India Ltd to lease three planes to help expand its fleet.

Etihad, which has invested in Air India’s rival Jet Airways (India) Ltd, has already bought five long-haul Boeing 777 jets from Air India.

“They also want to lease three more Boeing 777 LRs,” said a government official who declined to be named.

Air India has the largest fleet in India with 126 aircraft. Etihad has a 108-aircraft fleet.

Air India’s three Boeing 777 LRs that used to fly to New York are grounded because the airline has lost a lot of money by flying them.

“They are either parked somewhere or used for Jeddah operations sometimes,” said an Air India executive, who asked not to be named. “Because some people have decided in our company that it is a fuel guzzler. It was just bad configuration perhaps.”

The Etihad spokesman did not offer any comments for the story.

Air India sold five 777s to Etihad last year at a price of $336.5 million, the minister of state for civil aviation G.M. Siddeshwara told Lok Sabha last month.

Each of the Boeing 777 LRs cost about $300 million at list price.

Etihad has used these 777s after reconfiguring them to fly to Los Angeles from Abu Dhabi, the Air India executive cited above said.

A second government official, however, said that because Etihad is the only bidder, it remains to be seen whether the aircraft can be leased to it or whether Air India will need to invite a fresh tender to get more bidders. Norms dictate that the state-owned airline choose the best bidder.

“Let’s be clear, nobody in the current global scenario will buy these big planes except Middle Eastern carriers. We have to go ahead with what we have with all the checks and balances,” the first government official said.

The state-run carrier had acquired these planes as part of its order for 68 planes from the US aircraft maker Boeing in 2005.

The planes have never made money for the airline and the government auditor had criticized the then management and political dispensation for buying planes that the airline didn’t need.

“Earlier sale of five B777-200LR aircraft and now decision to lease out three aircraft are conclusive evidence that Air India had wrongly decided on acquisition of this particular aircraft. As this has led to huge losses, investigation is called for to fix accountability,” said Jitender Bhargava, author and former executive director of Air India.

Bhargava said it is best to get money from such expensive planes that have been grounded as soon as possible, as the airline is already on a taxpayer-funded turnaround plan.

“Whether aircraft are given to one airline or multiple airlines makes no difference as long as lease rental income is flowing in. In the financial state Air India is in, it should be facilitating easy conditions rather than place impediments, rigid conditions, making leasing difficult. If Air India has no use for aircraft, it is better to give them on lease rather than keep it on ground, incur expenditure on maintenance,” he said.