AI invites global tender for A-320

Air India's plan to take on no-frill carriers has hit a roadblock after it failed to attract any lessor for leasing of 19 Airbus A-320 aircraft and has now invited a fresh global tender for it.

In its fresh bid, the airline intends to procure new A320s with Sharklet, a fuel-saving wing-tip device, powered by CFM56-5B4/3 PIP engines, on dry lease for a lease period of maximum up to 12 years, up from the six-year lease period it planned in August.

The airline would be accepting the bids till November 19.

The national carrier had in its August tender invited global technical and financial bids for dry-leasing these planes, with the technical bids to be opened in September.

The planes were to be dry leased for six years instead of buying them, as part of Air India's Turnaround and Financial Restructuring Plans.

Dry lease is a leasing arrangement whereby an aircraft is provided for a limited period without crew or supporting staff, insurance, equipment or maintenance, as against wet lease where these add-ons are also supplied.

But according to airline sources, it failed to get a single aircraft on lease, due to lessors facing problems in getting back their aircraft following the Kingfisher Airlines fiasco.

Air India wants to take delivery of the first seven aircraft by March, four in the next financial year 2014-15, and the last eight in 2015-16.

In order to face tough competition from no-frill carriers and replace its old fleet, it had decided to acquire these new Airbus A-320s which has been its war-horse for domestic operations for over two decades.

The airline wanted the planes to be in all economy configuration with 180 seats.

The decision to lease these all-economy aircraft came amid strong indications of a growth in competition from no-frill carriers, as also the entry of AirAsia India in the domestic market.

Air India was among the launch customers of the A-320s and had bought 31 of them between 1989 and 1993. Again between 2003 and 2010, it purchased 43 planes of the A-320 family -- that is A-320s, A-319s and A-321s.

At present, it has 18 A-320s, of which 12 are owned and six leased, 24 A-319s (19 owned and five leased) and 20 own A-321 aircraft in its fleet.

The sources said the new leased aircraft could also be used to replace the ageing fleet of the same type of planes already in the Air India fleet.