Aging fleet and seats, supply issues hamper Air India turnaround Reuters

By Aditi Shah and Jamie Freed

NEW DELHI/SYDNEY (Reuters) – Two years after Tata Group took control of Air India in a $2.4 billion deal, overhauling an aging fleet amid parts shortages and persistent flight delays is the path of the former state carrier’s intention to become “a world-class airline”.

The global shortage is affecting plans for most airlines, but the problem is “more acute” for Air India, CEO Campbell Wilson said, as India’s flag carrier nears the halfway point of a five-year recovery plan but begins with a generation behind rivals such as Dubai. Emirates and Qatar Airways.

“Our product is obviously much older. These aircraft haven’t had a product refresh since they were delivered in 2010, 2011. And so it’s a more pressing need for us,” CEO Wilson said in an interview in Sydney. .

“If we have old seats and old in-flight entertainment systems, we’re operating with one arm tied behind our backs,” he said.

The challenges are greatest at the premium end of the plane as Air India seeks to attract high-spending travelers, added Wilson, a former Singapore Airlines ( OTC: ) executive.

Air India has already placed huge orders to modernize its fleet and just this month launched a $400 million plan to repair aging planes to drive its transformation.

The carrier’s restructuring after decades of state-owned decay is being watched by manufacturers and lessors as well as investors in Singapore Airlines – which is set to take a 25% stake in the Indian carrier from November and has agreed to invest up to 600 more millions of dollars in return.

“Air India… has a long way to go before it is closer to international standards for which it needs to complete the re-equipment process with new and upgraded aircraft,” said Singapore-based independent aviation analyst Brendan Sobie.

NEED SACKS

Rebuilding Air India’s reputation depends on getting planes with premium first-class seats and services in the sky as quickly as possible to attract fliers who are reluctant to book the carrier, even though it offers non-stop flights on key international routes, because of the shortage and the risk of delays.

Of the 470 new aircraft ordered by the airline, 70 are wide-body aircraft. It has already taken delivery of six Airbus A350s and leased 11 Boeing (NYSE: ) 777s.

It is the refit of around 67 aircraft, starting with 27 narrowbody aircraft that will be completed by mid-2025, allowing it to better compete with domestic rival IndiGo’s larger and more modern fleet.

The start of the 40 widebody tweaks originally scheduled for this year has been pushed back to early 2025 due to delays in getting custom business and first class seats.

Chair makers have said they are facing a shortage of skilled labor and capacity, Wilson said.

Once the renovation begins, it will take about two years to bring the wide-body fleet up to international standards, he added.

The older planes resulted in lower utilization by about an hour per day on average across Air India’s entire fleet, and even more for planes flying long-haul routes such as the US, Wilson said.

As an interim solution, Air India is curtailing some of its most profitable long-haul sectors, such as Mumbai to San Francisco and Delhi to London, guaranteeing modern aircraft.

In the year ended March, Air India grew capacity by 21 percent from a year ago and increased its passenger load factors, or percentage of seats occupied, reducing net losses by 60 percent to $532 million and increasing and revenue up 24.5% to $6.15. billion.

“When we can get the prices the product deserves and people have a good perspective on the reliability and service offering, we can fly more high-yield routes and bring back high-yield customers,” Wilson said.

He did not give a target date for achieving profitability.

“STABILIZE THE SHIP”

Air India, founded in 1932 by the late Tata Group chairman JRD Tata, was once among the world’s top airlines. Since its nationalization in 1953, it has gone into a long decline, mainly due to lack of investment.

When Tata regained control in 2022, the airline’s systems were outdated, offices scattered and 30 planes grounded for lack of spare parts.

“It was just an absolute meltdown. We had to really spend the first six months steadying the ship,” Wilson said.

By October 1, Air India will complete the merger of its low-cost carriers Air India Express and AirAsia India, and by November 12 it will add Vistara to the fold, which Tata currently owns with Singapore Airlines.

Flight delays are still a problem, with only 18 percent of Air India’s flights to Europe and 48 percent to North America arriving within 15 minutes of their scheduled time in August, according to aviation data provider Cirium.

A switch to Air India’s own maintenance and repair facility should help reduce maintenance delays, Wilson said.

The facility, which it is building with the help of Singapore Airlines subsidiary SIA Engineering, will be ready by 2026. Air India is contractually bound to use government-owned Air India Engineering Services Ltd until the end of 2024.

“Two years in, I think we’re in a good place,” Wilson said.