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Corporate Sep 9, 2012

Boeing 777 dry-lease: Will Air India be third time lucky?

There seem to be no takers for the five Boeing 777s which the cash-strapped Air India is trying to dry-lease for 6-10 year period, apparently because of the poor seat configuration.

"The airline has floated tenders to lease out these B 777-200 LR (long range) aircraft as many as three times in the last nine months. But so far it has failed to clinch a deal due to the poor seat configuration," Air India sources said.

On September 3, AI invited bids for dry-leasing five Boeing 777s for the third time this year. Since January the airline has been desperately trying to do away with these aircraft, following the decision to operate the 787 Dreamliners in their place.

Reuters

The first of the 27 Boeing Dreamliners, ordered in January 2006, landed only yesterday in Delhi. The national carrier had acquired the 777s as a part of its 67 aircraft order from Boeing over six years ago.

At present, it has 20 777s of which eight are 777-200 LRs, while the rest are 777-300 ERs (extended range planes).

"The eight 777-200 LRs, of which Air India plans to lease out five, are 235-seaters against the industry practice of 290-300 seats. The idea behind this configuration was to operate them on ultra long-haul routes like Chicago, New York, Toronto etc, on premium fares, but that did not materialise," the sources said.

This forced the airline to deploy them on medium haul sectors such as Hong Kong, Shanghai and London, rendering the aircraft operations economically unviable. "The aircraft, known as the Worldliner in the aviation parlance, or the one which can pair any two cities on the extremes, can fetch revenue only when operated on ultra-long routes," the sources said.

Air India decided to do away with these aircraft by leasing them as soon as it got a firm indication about the delivery of Dreamliners early this year. The first dry-lease tender was floated on January 2 this year.

"Air India had almost got into an agreement with Air Canada to lease these planes, but the deal fell through at the last minute due to the poor seat configuration," sources said.

PTI

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