Outdated Fleet and Seats, Supply Issues Hinder Air India’s Turnaround – Reuters

By Aditi Shah and Jamie Freed

NEW DELHI/SYDNEY – Two years after Tata Group acquired Air India for $2.4 billion, the airline is facing significant hurdles, including an aging fleet struggling with parts shortages and ongoing flight delays. These challenges are hindering Air India’s ambition to transform into a "world-class airline."

According to CEO Campbell Wilson, the global shortages affecting many airlines are particularly severe for Air India, which is midway through a five-year turnaround plan but is starting from a disadvantage compared to rivals such as Emirates and Qatar Airways.

"Our product is obviously a lot more dated. These aircraft haven’t had a product refresh since they were delivered around 2010 or 2011. Therefore, we have a more acute need," Wilson stated in a recent interview in Sydney. He emphasized that operating with outdated seats and in-flight entertainment systems puts the airline at a competitive disadvantage.

As Air India aims to attract high-end travelers, the most significant issues arise in the premium segment of its offerings. The airline has made substantial orders to upgrade its fleet and has recently launched a $400 million initiative to retrofit older planes as part of its transformation strategy.

The restructuring of Air India, after suffering from decades of decline under state ownership, is being closely observed by manufacturers, lessors, and investors, especially those involved with Singapore Airlines, which is set to acquire a 25% stake in the airline in November and has pledged an additional investment of up to $600 million to assist in its turnaround.

Experts, such as independent aviation analyst Brendan Sobie, recognize that Air India still has a considerable distance to cover before meeting international standards, particularly regarding the modernization of its aircraft.

To rebuild its reputation, Air India urgently needs to equip its planes with high-quality premium seats and services to entice passengers who are currently hesitant to fly with the airline, despite its non-stop international routes.

Among the 470 new aircraft ordered, 70 are widebody jets. So far, Air India has received six Airbus A350s and leased 11 Boeing 777s. The airline is in the process of refitting around 67 planes, commencing with 27 narrowbody jets with completion expected by mid-2025, to enhance its competitive edge against domestic rival IndiGo.

However, the initiation of retrofits for the 40 widebody jets, initially planned for this year, has been delayed until early 2025 due to issues in obtaining customized seating for business and first-class classes. Wilson noted that seat manufacturers are currently facing challenges related to skilled labor shortages and production capacity.

After the retrofitting process begins, it will take roughly two years to elevate the widebody fleet to meet international expectations. The older aircraft are currently resulting in lower utilization rates, averaging about one hour less per day across Air India’s fleet, particularly affecting long-haul flights like those to the U.S.

As a temporary measure, Air India is ensuring that some of its most profitable long-haul routes, such as Mumbai to San Francisco and Delhi to London, are serviced by modern planes.

In the fiscal year ending March, Air India increased its capacity by 21% compared to the previous year, achieving a 60% reduction in net losses to $532 million and a 24.5% rise in revenues to $6.15 billion.

"When we can charge prices reflective of the quality of our product and when passengers trust us for reliability and service, we can pursue higher-yield routes and attract back valuable customers," Wilson commented, although he did not specify a timeline for achieving profitability.

Founded in 1932 by Tata Group’s late chairman JRD Tata, Air India was once considered one of the top airlines globally. However, after nationalization in 1953, it entered a prolonged decline primarily due to insufficient investment.

Since regaining control in 2022, Tata Group has found Air India’s systems outdated, its operations fragmented, and around 30 aircraft grounded for lack of spare parts. "It was in complete disarray. The first six months were all about stabilizing the situation," Wilson remarked.

By October 1, Air India will complete merging its low-cost airlines, Air India Express and AirAsia India, and by November 12, it plans to absorb Vistara, which is co-owned with Singapore Airlines.

Despite ongoing issues with flight delays—only 18% of Air India flights to Europe and just 48% to North America arrived within 15 minutes of their scheduled times in August, according to an aviation data provider—changes are underway. Wilson indicated that transitioning to Air India’s internal maintenance and repair facility should help mitigate maintenance-related delays.

The facility, supported by a Singapore Airlines subsidiary, is expected to be operational by 2026. Meanwhile, Air India remains contractually bound to utilize government-owned Air India Engineering Services Ltd until the end of 2024.

"Two years in, I believe we’re making significant progress," Wilson concluded.