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Air India and its
subsidiary, Air India Express fleet, have chosen Tata AIG General Insurance and
other insurance companies to offer insurance coverage amounting to $10 billion.
The national carrier will be charged a premium of $30 million (Rs 246 crore) for
the upcoming financial year starting from April 1, which remains unchanged from
the previous fiscal year.
Tata Sons, the owner of
Air India, has selected its subsidiary, Tata AIG General Insurance, to act as
the “lead insurer” for the airline. In this role, Tata AIG General
Insurance will bear a larger portion of the risk and receive a higher
percentage of the premium (around 36%) compared to other members of the
consortium. By appointing Tata AIG General Insurance as the lead insurer, the
Tatas will have more control over the insurance process and greater influence
in future negotiations.
Increased Coverage and
Good Rates Despite Global Unrest:
Despite the conflict in
Ukraine, Air India has successfully obtained advantageous insurance rates to
cover its entire fleet. In the current financial year, Air India is looking to
expand its fleet by adding more aircraft, and as a result, the coverage amount
has been increased from $8 billion to $10 billion. The insurance policy will
provide coverage for a total of 166 aircraft, including Air India’s 140
aircraft and Air India Express’ 26 narrow-body aircraft.
The insurance consortium
comprises various members, such as GIC Re, United India Insurance, Oriental
Insurance Company, and ICICI Lombard General Insurance. As per global norms,
local insurance companies are expected to transfer 95% of the premium and risk
to foreign reinsurers. AIG is one of the prominent players in the aviation
reinsurance market, and they play a significant role in this process.
Air India has big plans
for its future growth, as it has placed orders for a whopping 470 new planes.
This move will also increase its insurance coverage, which is dependent on the
delivery schedule over the next few years. Moreover, the airline has the option
to purchase an additional 370 planes, which could bring the total number of
ordered planes to a staggering 840.
To further expand its
operations, Air India is also merging with other airlines such as AirAsia India
and Air India Express. These mergers will enable the company to negotiate
better insurance deals, especially as it continues to add more planes to its
fleet. As a result, the airline’s sum assured for its policy has gone up to $10
billion, with the inclusion of several leased aircraft.
Overall, Air India’s
ambitious expansion plans and strategic negotiations with other airlines are
set to propel its growth and success in the aviation industry in the coming
years.
Air India has announced a
substantial investment of $200 million towards improving its information
technology systems, and has also committed to investing $400 million in the
complete refurbishment of its current aircraft fleet. As part of its ongoing five-year
transformation plan, the airline has recently hired over 3,800 staff across
various departments, and has introduced 29 new policies for its employees
within the past six months.
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