Air India, now under the management of Tata, has effectively decreased its insurance expenses for the ongoing fiscal year by paying a $30 million premium for the fleets of Air India and Air India Express, with an assured sum of $12 billion. This marks a significant improvement from the previous year when the airline paid a similar premium amount but for a sum assured of $10 billion solely for the Air India fleet. The insurance coverage has been provided through a consortium of Indian insurance companies that includes Tata AIG General Insurance and has been further supported by reinsurance from foreign insurers like AIG Insurance which holds a key role in the aviation insurance sector.
Despite an increase in the number of aircraft to 200, the airline has managed to secure a favorable deal this year by not raising the premium paid, according to a source familiar with the situation. Looking ahead, once the merger of Vistara with Air India is finalized, it is expected to result in a substantial insurance transaction originating from India. Over the past two years, Air India has maintained a steady insurance premium without any increases, as stated by the source. Moreover, the Air India group has committed to ordering 470 planes, split between 250 from Airbus and 220 from Boeing, positioning the airline as a significant prospective client for aviation insurance providers.
In earlier reports from July last year, Air Asia India had received regulatory green lights to operate flights under the 'Air India Express' brand before a subsequent legal merger occurred between the two airlines to establish a unified low-cost subsidiary. Post the Tata group's acquisition of Air India and its low-cost subsidiary Air India Express in January 2022, the decision was made to merge the group's own low-cost carrier, Air Asia India, with Air India Express. As the airlines merge and consolidate vendors, it is anticipated that cost savings will start manifesting, according to the insider. Since taking over the airline from the Indian government, Tata has been actively implementing various strategies to revamp Air India, such as merging different entities like Air Asia India and Air India Express, and working on the integration of Vistara with Air India. Additionally, efforts have been made to modernize the fleet, as well as make adjustments to the workforce for efficiency.