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Air India will not take delivery of the 787 Dreamliner planes from Boeing till the finalisation of the compensation for the delay in supplying the aircraft.

This was formally told to the US-based company by the civil aviation ministry in a letter Monday.   

"We have sent them a letter yesterday (Monday) evening stating our intent to know what kind of compensation package they are willing to offer," a senior Air India official told IANS.

According to the official, any compensation will not come directly to the airline but will be deducted from the total cost of the aircraft. "There will be a deduction procedure that we have discussed. Compensation will be deducted from the overall cost of the aircraft."

The official further said that the airline has proposed a mechanism through which the compensation will be decided. The mechanism will focus on delay in delivery of individual aircraft.

"We do not want a lump sum for all 27 aircraft. As we now know that the total batch of 27 aircraft will be delayed in a varying manner, where first batch may come as soon as June while others may be stuck."

The official added that a team of engineers who are currently in the US for testing the aircraft will be called back, if the airline does not receives any response from Boeing in the coming days.

When contacted, Boeing refused to give any details.

“We do not comment about compensation in public. The first 787 is ready for delivery. We are waiting to deliver the first plane to Air India,” Dinesh Keskar, senior vice president (sales), Boeing Commercial Airplanes, India and Asia Pacific, told IANS over the phone from the US.

"The aircraft is already certified by Federal Aviation Administration (FAA) and we expect the aircraft to arrive soon in India."

The American Export Import Bank (ExIm) had given loan guarantees worth $3.3 billion to the carrier for buying 27 aircraft from Boeing.

Earlier in the day, Civil Aviation Minister Ajit Singh said Air India would not take delivery of its first batch of Boeing 787 Dreamliner until both the airline and the aircraft manufacturer decide upon the compensation package for the delay.

"We will not be in a position to take delivery of the aircraft, as the compensation package for the delay in the delivery of the plane has not been decided as of now," Singh told reporters.

According to Singh, Air India’s board has decided a compensation amount and is seeking
legal opinion on how to go about obtaining the same.

The national carrier had ordered 27 Boeing 787 aircraft in 2005-06. However, the first batch of two aircraft would only be delivered at the end of this month.

Overall the delivery of the aircraft has been delayed by three years causing the airline to lose several opportunities to deploy the aircraft on long haul international routes.

The minister said all possible legal recourse were available to the airline including that of arbitration.

The development comes a day after the airline’s board in a meeting here decided a ballpark figure of $750-$800 million from Boeing for the delay in the delivery of the aircraft.