Dow Jones Newswires
NEW DELHI, Jul 28: State-run carrier Air India said Saturday it plans to buy about 60 new commercial passenger aircraft over the next few years and aims to start the selection and purchase process by mid-August.
Air India, which is being merged with state-run Indian Airlines, ordered 68 Boeing Co. (BA) jets, worth over $11 billion at list prices, in December 2005 in a move to modernize its aging fleet.
"We will need to order about 60 plus more planes, but this is just a rough estimate," Air India Chairman V. Thulasidas said without giving a timeframe. He was speaking to reporters on the sidelines of an event marking the delivery of the first aircraft from Boeing.
Separately, Indian Civil Aviation Minister Praful Patel said the aircraft selection process is likely to begin in a fortnight.
"The whole plan will be evaluated for requirements like extra wide body aircraft ," Patel said.
According to industry officials, it takes up to four years for an aircraft to be delivered after the purchase order is confirmed.
India's aviation industry expects to grow by more than 25% annually over the next few years as a rapidly expanding economy boosts incomes, making it an attractive market for local and international carriers.
Around 60 million Indians traveled by air in 2006, and this is expected to increase to 100 million 2010.
Indian Prime Minister Manmohan Singh on Saturday formally launched Air India's new fleet, including its freighter service, at an event marking the delivery of the first planes from the Boeing order - two 777-200LR aircraft.
The 68-plane order comprises eight 777-200LR Worldliners, 15 777-300ERs, 27 787-8 Dreamliners and 18 next-generation 737-800 planes for its low-fare unit, Air India Express.
Air India will use the 777-200LR to become the first India-based airline to offer nonstop flights between the financial centers of India and the U.S. - Mumbai and New York - from Aug. 1, officials said.
In December 2005, Patel also said that as part of the Air India deal, Boeing will invest up to $100 million in India for setting up a maintenance, repair and overhaul complex and another $75 million to install four aircraft simulators.
Engine manufacturer General Electric Co. (GE) will also invest $20 million for an engine shop and another $10 million for training and other civil aviation requirements, Patel had said.
Merger To Boost Performance
In March, the government approved the merger of Air India and Indian Airlines in a move aimed at building a single airline to take on rising competition from both domestic and foreign rivals.
"There was a time when Air India was regarded as one of the world's best airlines. I am sure that Air India will once again regain that reputation," Singh said.
Legal formalities for establishing the National Aviation Co. of India Ltd. are expected to be complete in the first week of August, Civil Aviation Secretary Ashok Chawla said earlier this week.
National Aviation will run the merged airline - which will be called Air India to retain brand recall - and Air India Express.
When asked about recent media reports that the merger may be delayed as labor unions of the two airlines were unhappy with talks with the government on wage hikes and promotions, Chawla said the integration process will take time, but talks will go on.
"I have seen reports that some parts of unions have expressed a kind of anxiety. We are talking to them," Chawla said.
"The integration in terms of human resources will be spread over a long period of time and though this is going to take time, I see no difficulties."