Boeing defends A-I deal terms

American aircraft maker Boeing today said Air-India will save as much as $185 million a year by going for Boeing aircraft and not those made by arch rival Airbus Industrie to expand its fleet. The Air-India board had last week approved the acquisition of 50 new Boeing aircraft at a cost of $6 billion.

"If you look at the financial benefits of choosing the Boeing fleet over Airbus, Air-India will make huge cost savings. This is much higher than any discount that can be offered," said Dinesh Keskar, senior vice-president (sales), Boeing.

According to Keskar, going by the projected route pattern and aircraft utilisation of Air-India, the operating profit per year for 27 Boeing 787-8 aircraft would be about $81 million higher than that of Airbus A-330-200s; the eight Boeing 777-200 (ER) would earn $44 million more per year than Airbus A-340-500s; and 15 Boeing 777-300 ERs would have an advantage of $60 million a year over Airbus A340-660.

Keskar also said that operating costs of Air India would also be lower with a Boeing fleet.

"Air India would realise savings of over two million gallons of aviation fuel per aircraft per year with B-777-200 LR compared with A-340-500 and over one million gallons per year by operating B-777-300 ER rather than the A-330-200s," he said.

The Boeing aircraft would be able to carry more passengers and burn less fuel than their Airbus competitor, he said, adding that the Boeing planes would also have a larger resale value than its competitor.

When contacted, Airbus Industrie said that Boeing's claim was a highly "subjective claim". Airbus also said that its super jumbo A 380, which was not even considered by Air-India, was about 31 per cent more cost effective than Boeing aircraft.

Commenting on the controversy, Civil Aviation Minister Praful Patel today said the government was open to any investigation into the deal if it was required. On the issue of Members of Parliament raising questions about the deal, Patel said that it was for the Prime Minister to decide on the demands of the MPs.

To sweeten the Air-India deal, Boeing also said that it was in talks with various Indian companies to set up constructing, maintenance and training support infrastructure in the country, including facilities to carry out heavy checks on planes and pilot training.

Besides, Boeing will also undertake huge counter trade activities in India as a part of the deal. Sources said that as per the deal agreement, any aircraft maker bagging the Air-India order was to undertake counter trade to the tune of 30 per cent of the deal size.

Boeing also said that it was 'absolutely incredible' for its European competitor to seek a Central Vigilance Commission (CVC) probe into the Air-India decision to procure 50 Boeing aircraft.

'It is absolutely incredible that Airbus is questioning Ai"�India's evaluation for purchase of aircraft. There is no doubt about Air-India's evaluation process and tender norms. It can stand any scrutiny,' Boeing's senior vice-president (sales) Dinesh Keskar said here today.

He said that referring the case to the CVC issue was an internal matter of the government and the airline. 'Did we ask for a CVC probe when Indian Airlines finalised the deal for procuring A-320s from Airbus,' Keskar said.

On the issue of Boeing offering a reduction in the price for the Indian Airlines deal he said, 'We waited for some time and when we had new innovations like the winglets and other technology, we applied with a reduced price. We did not get a single reply from Indian Airlines. So it is entirely upto the airlines to take a decision regarding their fleet acquisition plan,' Keskar said.

Keskar said, 'Our newest aeroplanes for medium, long and ultra-long haul markets are the right choice for Air-India because these are clearly positioned to provide it with higher revenue potential and lower operating costs which translate into greater profit potential'.