Govt approves Air India compensation package for Dreamliner delay

A Group of Ministers (GoM) on Wednesday approved a compensation demand to be made by Air India from US aircraft maker Boeing for a four-year delay in delivery of Boeing 787 Dreamliner aircraft.

“The GoM considered it and now we will send it to the CCEA (Cabinet Committee on Economic Affairs). ... It will be taken up whenever the next CCEA meeting is held,” Civil Aviation Minister Ajit Singh said after a meeting of the GoM that is headed by Home Minister P Chidambaram.

A meeting of the CCEA is likely to be held tomorrow. Singh declined to specify the amount of compensation to be paid by Boeing on grounds of confidentiality.

Earlier, however, Chidambaram came down heavily on the civil aviation ministry and Air India on the issue of the delay in delivery of the Dreamliner.

He questioned why nothing was done in the past four years on the issue of compensation, pointing out that other airlines have got compensation from Boeing for the delays. 

Air India had negotiated a compensation package with Boeing because the planes were to be delivered in 2008, that is about four years delay.

“The earlier agreement was for a delay of six months and certain amount was agreed upon. That has been enhanced now,” Singh said.

The GoM is understood to have looked at the terms of compensation and the amount to be paid by Boeing as per the latest agreement with Air India that was approved by its Board on May 28.

Deposing before a parliamentary committee, then Air India chairman and managing director Arvind Jadhav had said, “We have slapped a compensation claim of $710 million. Obviously, they have confirmed $145 million they will pay as compensation for the delay...”

The Parliamentary report was made public in March 2010.

(With inputs from PTI)