Aid to Air India

The recent decision taken by U.S. Exim Bank to support Air India (AI) financially has been received with mixed feelings. Most American carriers have labeled AI as “one of the most poorly-run airlines in the world,” and have strongly opposed the $3.4 billion loan to it to buy Boeing 787 Dreamliners.

Air India has pending orders for 27 Boeing Dreamliners, the deliveries of which are expected to begin by the end of this year. These are part of the 68-aircraft order placed by the national carrier with the U.S. plane manufacturer.

Personally, I think that AI has caught a huge break. With no financial backing and dipping commercial value, this was possibly one of the last resorts. I’m not really sure but the kudos probably need to be directed towards Rohit Nandan, who recently replaced Arvind Jadhav (no relation to me) as Chairman.

The opposition by American carriers has resulted in the Air Transport Association (ATA), a trade group representing America’s biggest carriers, shooting off a letter to U.S. Export-Import Bank Chairman Fred Hochberg opposing the decision, saying Air India’s financial ill-health should disqualify it from getting American help.

The U.S. Exim Bank had last month decided to give loan guarantees of $1.3 billion to support Air India’s fleet acquisition from Boeing and another $2.1 billion preliminary commitment to support future deliveries of the U.S. aerospace company’s planes to the Indian national carrier.

From a business perspective, I have always believed that financial stability is the key to a successful airline. Profit margin, commercial (face) value, etc follow. The murky waters in the Indian Aviation Market today have made most airlines (read: Kingfisher Airlines) adapt to the oncoming wave.

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