Not the Dream-Land They Wanted

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Aviation 2010,a five day event is scheduled to run from March 3-7, where some 200 companies will showcase the latest global aerospace technology at the event offering opportunities for them to do business in India.  Photo: AFP

INDIAN AVIATION in general, and Air India in particular, would wish away the Dreamliner trouble if they could. The Boeing 787 jet is a very critical bridge for Air India’s revival, and the grounding of this fleet has put an early spanner in the works for an airline trying to turn the corner.

Air India’s improvement plan was partly dependent on routes — international and domestic — where it was operating the Dreamliner. According to experts, the carrier is losing $1,00,000 per day on fuel alone because of a shift from 787 to the heavier 777 aircraft in the interim.

Though Air India didn’t confirm this figure, the spokesperson admitted that Dreamliners “are fuel-efficient and bring down the cost considerably”. One of the first customers for the 787, Air India ordered a total of 27 planes in January 2006. Seven arrived last year and it plans to get six more planes by 2013 end and the remaining 15 by 2016. The 787 is considered to be at least 20 percent more fuel-efficient than any other Boeing aircraft due to its lightweight body and carries 210-290 passengers. Air India was banking on the Dreamliner fleet to explore new destinations in Southeast Asia, West Asia and Europe to boost revenue for the beleaguered liner. As of December 2012, Air India’s debt stood at more than Rs 40,000 crore. This was in addition to losses more than Rs 20,000 crore. The temporary replacement with the Boeing 777 is hurting the airline, as this is typically a long-haul aircraft unsuitable for shorter or middle-haul routes.

“We are maintaining the routes though, in some cases, we have clubbed the destinations; for instance, the same plane flies to Paris and Frankfurt. On the domestic routes, we have shifted to 747s and A330s,” says an Air India spokesperson.

Dreamliners are priced between $140 million and $200 million, which is close to Rs 1,000 crore an aircraft. A quick numbers assessment would show that losses on mismatch of aircraft with routes and high interest payments more than make up for any cost saving on fuel due to the Dreamliners. So while the grounding of the aircraft comes as an additional blow, Air India is already pretty deep in losses and is unlikely to start making money to sustain itself.

The Dreamliner is important for Air India for another reason. Having struck an early deal in 2005, Air India was hoping to make profits by selling and then leasing them back. Selling aircraft at a premium to their buying price to leasing companies to raise cash and then getting them back on monthly rentals is an oft-used strategy by airlines around the world to cut fixed costs. With the 787 grounded, one wonders if buyers or lessors would wait for further US Federal Aviation Administration (FAA) instructions and Boeing investigations to conclude a deal.

The 787, named after the date of its first rollout on 8 July 2007 — 7/8/7 in the US dating method — is being investigated since a battery caught fire on the ground in Boston and another that caused an emergency landing in Japan on 16 January. Officials of All Nippon Airways, the biggest operator of 787s, told The New York Times that it had replaced 10 batteries before the fires and reported the issue to Boeing.

Writing in an Australian daily, Martin Aubury, former aeronautical engineer at Boeing, explained the reason behind the manufacturer opting for the new batteries: “The dangers of choosing lithium-ion batteries for the 787 were clear to Boeing and its regulator, the FAA, but the weight-saving was irresistible.”

BUT AVIATION experts are not too concerned about what are being called “aviation hiccups”. Says test pilot, Air Marshal (retd) Anil Chopra: “All ambitious aircraft projects go through teething development problems. The lithium-ion batteries have been used in F-35 and Airbus A350. It’s now a matter of integration.”

Ronen Sen, India’s ambassador to the US when the Air India-Boeing deal was signed, believes it was a brave and calculated move on the airline’s part to stay ahead of the curve.

However, aviation expert Cyrus Guzder doesn’t agree and expresses concern over the way Boeing led the architecture of the 787. Guzder articulates three new risks undertaken by Boeing. One, the jetmaker used lighter carbon fibre for the fuselage and wings, when earlier only some components were made from it. Two, it outsourced most part of its supply chain in a bid to take a faster route. Three, the whole integration was also subcontracted, from a distance, something that threatened to be uneven. On the first count, many manufacturers believe the lightweight carbon fibre is the component of the future and will go miles to save flying costs.

“The main issue right now is to fix whatever is wrong with the 787 and get it airborne again,” says Saj Ahmed of London-based Strategic Aero Research. “It’s premature to speculate what the causes of the 787s are while investigation is still on.”

Despite the support for Boeing and the technological edge it enjoys, it’s clear there will be no quick fixes. For a plane that was delayed by almost four years before it could take flight, the regulators will take these new challenges with seriousness before they concede Boeing’s dream order can come true.

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