Air India may not get compensation from Boeing for 787 grounding

by Vinay Bhaskara

After Air India joined most global operators of the Boeing 787 Dreamliner in grounding the aircraft following a Federal Aviation Administration (FAA) emergency directive due to issues with the 787’s Lithium-Ion batteries, the beleaguered Indian national carrier is reportedly seeking compensation from Boeing for the losses caused by the grounding. India’s civil aviation minister Ajit Singh said that Air India will seek “some kind of compensation” for the grounding, but that the issue will be taken up with Boeing later; after Air India ascertains the exact cause behind the battery issues and gets the Dreamliner fleet back into service.

Singh re-iterated that Air India plans to take full delivery of its entire order for 27 Dreamliners, and that they will be receiving an interim report from the FAA over the next couple of days that will shed more light on the likely duration of the grounding. Air India has already substituted other wide-body aircraft onto the 787’s operational routes.

Unlike Air India’s attempts for outrageous levels of compensation from Boeing for the delay in Dreamliner deliveries, this request for compensation is relatively reasonable given the nature of this issue.

However, whether or not Air India ultimately receives compensation depends on how the 787 purchase contract between Air India and Boeing was structured.

For example, during the furore over the Airbus A380’s wing cracks earlier this year, Emirates sought compensation to cover the cost of repairing the cracks from Airbus. However, because this provision was not covered in Emirates’ A380 purchase contract with Airbus, they were refused compensation.

Regardless of the merit of Air India’s complaint, they will likely be unsuccessful in securing compensation for the same reason, unless their contract specifically covers such contingencies.