IndiGo to Receive Compensation from Pratt & Whitney Through IAE

For the aviation industry in India, the metal contamination issue in the Pratt & Whitney PW1100 engine series was a major setback. Throughout the pandemic, all the major airlines managed to survive. It was these issues, which sank one major airline in India in the form of GoFirst. In addition, IndiGo, the largest airline in India had to ground more than 70 aircraft of its fleet.

In an update, IndiGo has informed that the airline will receive compensation from the engine manufacturer.

IndiGo to Receive Compensation From Pratt & Whitney

In its filing with the National Stock Exchange of India (NSE), the Company Secretary and Chief Compliance Officer of IndiGo, Neerja Sharma informed that the airline is set to receive compensation from Pratt & Whitney (P&W). However, P&W will not pay the amount directly.

International Aero Engines LLC (IAE) is one of the affiliates of P&W. IndiGo has concluded a settlement with IAE, under which IAE will provide the airline with customized compensation because of the large number of grounded aircraft.

However, the airline has refrained from sharing the compensation details in the public domain. There are many ways, in which an engine manufacturer can provide compensation to an airline such as financial reimbursement, discounted engine maintenance or replacement services, additional spare parts or technical support, extending warranties of affected engines, and many more. It will be interesting to know the details of IAE’s compensation, whenever the companies make it public.

Another airline from India, GoFirst is fighting a battle with P&W for getting compensation. The proceedings are ongoing in the Singapore International Arbitration Court (SIAC).

What is the Issue With P&W Engines?

The issue has been found majorly in the PW1100G series engines. In the engines manufactured between 2015 and 2021, P&W used powdered metal for the manufacturing of some engine parts like stage 1 and stage 2 disks in high-pressure turbines.

This powdered metal is now getting contaminated. As a result, there is a risk of cracks generating in these disks, posing a safety risk.

The Federal Aviation Administration (FAA) had issued an Airworthiness directive, that requires inspection of these parts at specific intervals. P&W is now checking all these airframes. Between 2023 and 2026, a total of 600-700 Airbus A320 family jets are expected to be grounded because of these checks.

Globally, airlines have been the victim of these issues. Spirit Airlines, Wizz Air (Hungary), Volaris, Turkish Airlines, Air New Zealand, Hawaiian Airlines, etc are some examples.

What Next for IndiGo?

Indian aviation is booming and IndiGo is the largest airline. For IndiGo, more than 70 aircraft on the ground do not contrast with the atmosphere. Hence, IndiGo is planning to shoot at two aims with one broken bow.

According to a report from Moneycontrol, the airline is looking to refit some of these grounded jets with CFM engines. It already has huge orders for CFM engines.

In addition to the refitting of engines, IndiGo is planning to refurbish these aircraft with business class seats. By the end of this year, it is expected to launch its business-class product on a few business routes in India. By retrofitting the grounded jets, the airline will no longer have to ground its other already operational aircraft.

In summary, whenever the grounded aircraft comes back into service, some of them will be fitted with new CFM engines and all-new business-class products.

Conclusion: IndiGo’s Compensation from Pratt & Whitney

IndiGo is all set to receive compensation from Pratt & Whitney. International Aero Engines LLC, one of the affiliates of P&W will provide the compensation to the airline. The exact amount of compensation has not been shared by the airline. IndiGo has more than 70 aircraft grounded because of P&W engine contamination issues.

What do you think should be the compensation of P&W to IndiGo? Discuss in the comment section.