The airline's new planes appear to be one step closer to delivery - and flights to Australia, writes Ben Doherty.
The oft-promised, oft-postponed arrival of a new Indian plane on an Australian runway appears to be one small step closer. At present, there are three new, ready-to-go Boeing 787 Dreamliners - painted in Air India's red and yellow livery - at Boeing headquarters in Charleston, South Carolina.
Air India wants to put these long-haul craft into service flying to Australia, or on another route that would free up planes to make the trip to Melbourne or Sydney.
"We are scheduled to receive three Dreamliners this month," the Civil Aviation Minister, Ajit Singh, said in June.
"The Australia operation will commence in August-September."
But that deadline is unlikely to be met, because the planes aren't moving - yet. Boeing and the Indian government are said to be finalising a compensation package offered by the plane manufacturer, a package considerably smaller than India wants.
India ordered 27 Dreamliners from Boeing in 2005, with the first due to arrive in 2008. Boeing, though, has been hit hard by strikes at its production plants and had trouble sourcing parts, so the planes' delivery has been delayed and delayed.
Earlier this week, Qantas announced it was cancelling its own order for 35 Boeing 787 Dreamliners in a bid to cut costs, though it still plans to go ahead with 15 of the aircraft for budget offshoot Jetstar.
India has sought about $710 million in compensation for the lost potential revenue from the Dreamliner delays; Boeing has offered about $145 million. The matter then went to the Indian cabinet. "It has to be approved by the cabinet," Singh said. "In that process, we have to take comment from every ministry. Some ministries have not given comment; some have raised some questions."
According to The Wall Street Journal, India's Cabinet Committee on Economic Affairs has given the green light to Air India to take delivery of the first round of 787 Dreamliners after progress was made on a compensation agreement. However, a timeline for delivery is still unclear.
Despite the slow pace, there is considerable enthusiasm on both sides of the Indian Ocean for restarting direct flights between Australia and India.
Air India says an Australian service will be quickly profitable and help drag the embattled government carrier from its current economic morass.
The Australian High Commissioner to India, Peter Varghese, has said direct flights from India would boost trade, tourist and student links and are a priority for the Australian government.
Both the Victorian and NSW governments have offered significant concessions to Air India planes to land at Melbourne and Sydney airports. Fairfax Media, which owns The Sydney Morning Herald and The Age, has seen an unofficial proposed draft timetable, featuring seven direct Australian flights a week - four to Sydney and three to Melbourne - as well as flights between Melbourne and Sydney.
And there appears to be demand.
Last year, for the first time, India was the largest source of permanent migrants to Australia, with 29,018 of the 185,000 places in Australia's permanent migration scheme going to Indians. India surpassed China and Britain as the largest provider of permanent migrants. And a recently released Tourism Australia report suggests up to 300,000 Indians could visit annually by 2020 if growth in tourist numbers continues to accelerate.
Ben Doherty is the south Asia correspondent.