Air India isn’t able to pay the high costs for some specific new engines and replacement parts anymore.
The consequence: Air India has grounded 17 aircraft, including two Boeing 787-8s, three Boeing 777s, four Airbus A319s, and eight Airbus A321.
Air India, which is India’s national carrier, has, in the last several years, lost significant market share to low-cost carriers like Indigo, Spicejet, and Go Air. These carriers offer cheap services that are appealing to passengers. In 2014, Air India held 20% of the Indian market. In September 2018, it held only 11,8%.
To prevent additional debt, India’s government tried to sell Air India to a private investor. After the sale failed earlier this year, Air India’s share is falling again.
Because aircraft are only useful if they are in the air, India’s aviation minister, Jayant Sinha, wants India’s government to continue to Air India in order to get the grounded aircraft flying again. Narendra Modi, India’s Prime Minister, supports this proposal and has suggested giving Air India ₹23 billion (USD$330 million). Now, Parliament must vote on whether or not to provide Air India additional support.
Additional debt, which could be worsened by this grounding, would have high impacts on India and India’s government, which would fund Air India regardless of if an additional bailout is approved. Additional governmental support, therefore, seems likely.
Air India’s pilots demand a fleet renewal so that Air India can compete with other airlines, which constantly purchase new aircraft that are more efficient and comfortable for passengers. It will be interesting to see what price India’s government will be willing to pay.
Featured image by Akshay Mantri/Aeronautics Online