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Air India needs better planes, service to compete with

Emirates

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Plan to refit old widebody planes delayed due to seat

shortages

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Airline unable to push older jets leading to lower flying

hours

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Higher capacity, better load factor helped Air India cut

losses

in FY24

By Aditi Shah and Jamie Freed

NEW DELHI/SYDNEY, Sept 27 (Reuters) - Two years after

Tata Group took control of Air India in a $2.4 billion deal,

re-kitting an ageing fleet amid parts shortages and persistent

flight delays stand in the way of the former state-owned

carrier's intent to become "a world class airline".

Global shortages are hurting plans for most airlines, but

the problem is "more acute" for Air India, CEO Campbell Wilson

said, as India's flag carrier is nearing the halfway mark of a

five-year turnaround plan but starting a generation behind

rivals like Dubai's Emirates and Qatar Airways.

"Our product is obviously a lot more dated. These aircraft

haven't had a product refresh since they were delivered in sort

of 2010, 2011. And so it's more of an acute need for us," CEO

Wilson said in an interview in Sydney.

"If we've got legacy seats and legacy in-flight

entertainment systems, we're operating with one arm tied behind

our back," he said.

The challenges are the biggest at the premium end of the

plane as Air India looks to lure high-spending travellers, added

Wilson, a former Singapore Airlines executive.

Air India has already placed mammoth orders to upgrade its

fleet and just this month kicked off a $400 million plan to

refit old planes to drive its transformation.

The carrier's restructuring after decades of decay under

state ownership is being watched by manufacturers and lessors,

as well as investors in Singapore Airlines - which is

set to own a 25% stake in the Indian carrier from November and

has agreed to invest an additional up to $600 million in the

turnaround.

"Air India ... has a long way to go before being closer to

international standards for which it needs to complete the

process of re-kitting with new and retrofitted aircraft,"

Singapore-based independent aviation analyst Brendan Sobie said.

NEED FOR SEATS

Rebuilding Air India's reputation hinges on getting planes

with top-notch premium seats and service in the skies as fast as

possible to lure flyers who are reluctant to book the carrier,

even if it offers non-stop flights on key international routes,

due to poor product and risk of delays.

Of the 470 new planes the airline has ordered, 70 are

widebody jets. It has already taken delivery of six Airbus

A350s and leased 11 Boeing ( BA ) 777s.

It is refitting about 67 planes starting with 27 narrowbody

ones 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 refits, originally slated for

this year, has been pushed to early 2025 due to delays in

getting its customised business and first class seats.

Seat manufacturers have said they are grappling with a

shortage of skilled labour and capacity, Wilson said.

Once the refit starts, it will take about two years to bring

the widebody fleet to international standards, he added.

Older jets have led to lower utilisation by about an hour

per day on average across Air India's fleet, and even more for

planes flying long-haul routes like to the U.S., Wilson said.

As an interim solution, Air India is ring-fencing some of

its most profitable long-haul sectors like Mumbai to San

Francisco and Delhi to London by guaranteeing modern planes.

In the year ended March, Air India increased its capacity by

21% from a year ago and pushed up passenger load factors, or the

percentage of seats filled, narrowing net losses by 60% to $532

million and growing its revenues by 24.5% to $6.15 billion.

"When we can command the prices the product deserves and

people have a good view of the reliability and service

proposition, we can fly to more high-yield routes and bring back

the high-yield customer," Wilson said.

He did not give a target date for reaching profitability.

'STABILISE THE SHIP'

Air India, founded in 1932 by Tata Group's late chairman JRD

Tata, was once among the world's best airlines. Since its

nationalisation in 1953, it entered a long decline mainly due to

lack of investment.

When Tata regained control in 2022, the airline's systems

were antiquated, offices scattered and there were 30 aircraft on

the ground for want of spare parts.

"It was just in absolute shambles. We've had to really spend

the first six months to stabilise the ship," Wilson said.

By Oct. 1, Air India will have completed the merger of its

low-cost carriers Air India Express and AirAsia India, and by

Nov. 12 it will add Vistara to the fold, which Tata currently

jointly owns with Singapore Airlines.

Flight delays are still an issue, with only 18% of Air

India's flights to Europe and 48% to North America arriving

within 15 minutes of the scheduled time in August, according to

aviation data provider Cirium.

A shift to Air India's own maintenance and repair facility

should help reduce maintenance-related delays, Wilson said.

The facility, which it is building with help from Singapore

Airlines subsidiary SIA Engineering, will be ready by

2026. Air India is contractually obligated 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.