Top insurance companies compete to cover Tata Group-owned Air India fleet

Tata-owned airline negotiating premium for FY24

Top insurance companies, such as Tata AIG General Insurance, are competing to provide insurance cover to Tata Group-owned Air India’s fleet for the next financial year (2023-24). This includes insurance cover for new planes that would be delivered in the next financial year. 

Insurance executives say a large number of multinational companies based in Europe have met Air India executives in London to discuss the contours of the insurance cover.

Last year, insurance companies jointly provided $12 billion insurance cover to Air India (for its 117 aircraft) and Air India Express (for its 24 aircraft). The airline had paid an insurance premium of about ~300 crore. 

The airline has placed an order for 470 new planes. The insurance cover will depend on the delivery schedule over the next few years. The airline also has the ‘option’ to buy another 370 planes, taking the order size to 840 planes.

Besides, the mergers of AirAsia India and Air India Express, and Air India and Tata Singapore Airlines (SIA) are giving the Tatas more negotiating power.

“Air India is undergoing a merger with Tata SIA. This will help the airline negotiate a better deal with insurance companies,” said a source close to the development. 

Tata SIA, which operates under the Vistara brand, has a fleet of 54 aircraft. 

Insurance executives said with the potential bumper business of new aircraft, several companies are in the fray, including The New India Assurance Company, Oriental Insurance Company, United India Insurance, and National Insurance Company.

Among private players, ICICI Lombard was also part of the consortium providing insurance cover last year.

An email sent to Air India did not elicit any response until the time of going to press.

Indian insurance companies retain only part of the insurance premium and pass on the rest of the premium and risk to the international consortium to derisk their books. 

In the current financial year (2022-23), the insurance cost for Air India had shot up due to the war in Ukraine and an air crash in China last year.