Air India seems spoilt for choice this year for the insurance of its fleet. The airline spends millions every year for insurance coverage of its aircraft, and now finds itself in a better position to negotiate as part of the Tata Group.

Advantage Air India

Air India has multiple options for insurance cover for its planes for the next financial year. As indicated by Business Standard, several Europe-based multinational companies met the airline’s officials in London to discuss the structure of the insurance deals.

The airline has placed massive orders with both Boeing and Airbus for nearly 500 planes. Delivery of some of those aircraft will begin this year, on top of the several others that will arrive on short-term leases.

Tata AIG General Insurance is among those competing for the deal; others include The New India Assurance Company, Oriental Insurance Company, United India Insurance, and National Insurance Company.

Air India’s current position as part of the Tata Group and its association with Singapore Airlines has put it in a better position this year to negotiate the terms of its aircraft insurance. The airline will likely explore all its options to get the best deal possible.

How much does it cost?

Airlines pay millions in premiums for insurance of their fleets. Last year, the total cost to cover 117 aircraft of Air India and 24 aircraft of Air India Express came to around ₹3 billion ($36 million). Of this, around $32 million was for the Air India fleet alone.

Several global factors have upped the premium for aircraft insurance, including the Russia-Ukraine conflict. Air India’s insurance premium last year was also decided after plenty of negotiations by the new management in India and London.

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In the end, Air India got a good deal of a cover of $8 billion for its planes, although the premium was slightly more than the $31 million it paid the year before. It remains to be seen what premium amount will be finalized for the next financial year.

Tata AIG received a 30% share in the coverage last year, while New India Assurance took the highest share of 40%. Indian insurance companies retain only 5% of the premium and pass on the rest to foreign insurers to keep their books risk-free.

Plenty of business

It’s not all that surprising to see insurance companies knocking on Air India’s door to cover its fleet. The airline is now much more financially stable than it was as a government-run carrier. The hundreds of aircraft that will join its fleet over the next decade also make it a lucrative company to do business with.

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Air India recently announced massive orders of 470 planes with Boeing and Airbus, which include 210 Airbus A320neo family of aircraft, 40 A350s, 190 Boeing 737 MAX planes, 20 787s, and 10 777X aircraft.

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Source: Business Standard

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  Air India

  IATA/ICAO Code:

  AI/AIC

  Airline Type:

  Full Service Carrier

  Hub(s):

  Delhi Indira Gandhi International Airport

  Year Founded:

  1946

  Alliance:

  Star Alliance

  CEO:

  Campbell Wilson

  Country:

  India

  Region:

  Asia