Boeing gives big discount to AI

indian National carrier Air India moved a step closer to expanding its fleet strength with the empowered Group of Ministers giving its approval for the purchase of 68 aircraft after......




National carrier Air India moved a step closer to expanding its fleet strength with the empowered Group of Ministers giving its approval for the purchase of 68 aircraft after completing final round of price negotiations with US manufacturer Boeing.

In a major move, the aircraft maker offered massive discounts on the total value of the deal and assured the government that it would set up a maintenance, repair, overhaul – popularly called MRO – and training facilities in India.

Boeing offered to sell the aircraft at a total price of around Rs 35,000 crore – a reduction from around Rs 38,900 crore – while promising to set up MRO and training facility at a cost of around $205 million.


Civil Aviation Minister Praful Patel told reporters after a five-hour-long meeting that the eGoM and AI officials held with Boeing representatives that the documents would now be sent to Prime Minister Manmohan Singh for final approval.

The eGoM, headed by Finance Minister P Chidambaram, has Law Minister H R Bhardwaj and Programme Implementation Minister Oscar Fernandes and Patel as members. Official sources said AI has converted its options to buy 16 aircraft into a firm order, taking the total number of firm orders to 50. It is also acquiring 18 more aircraft for its subsidiary Air-India Express.

The fleet would comprise eight Boeing 777-200 (Long Range), 15 B777-300 (Extended Range) and 27 B787s, besides 18 Boeing 737-800s for Air-India Express.

The AI Board has selected engines for all the 68 aircraft from the CFM International, a 50:50 joint venture between Snecma of France and General Electric Aviation of the US.

With Saturday’s meeting, the government has paved the way for fleet acquisition and renewal of both the national carriers. IA’s proposal for purchase of 43 Airbus aircraft secured the government’s clearance recently and delivery of the A320 family aircraft would start mid-2006.