A-I sets up panel for aircraft

MUMBAI, JUNE 29: The board of loss-making Air India has set up techno-economic committees on Tuesday to evaluate its fleet expansion, con...

MUMBAI, JUNE 29: The board of loss-making Air India has set up techno-economic committees on Tuesday to evaluate its fleet expansion, consisting of small range medium capacity aircraft. The board is under intense pressure to clear the Rs 2,000 crore expansion project from the civil aviation ministry.

The Air India board8217;s decision comes after the civil aviation ministry has made it clear that another tranche of Rs 1,000 crore of public money would be injected into the airline only if Air India buys new aircraft from these funds.

In fact, the caretaker government had even fixed a deadline of June-end for the clearing the expansion project. The committee members will consist of top Air India8217; engineering and finance officials. The airline is hoping to contain its losses in the current fiscal to Rs 50 crore and based on this optimism is going for a fleet expansion.

Presentations were earlier made by both Airbus and Boeing, who are vying for the Air India8217;s order. While Airbus is offering its A-330aircraft, Boeing is offering its 767 aircraft.

Top Air India officials say that the present government is pressurising them to buy aircraft at a time when they should be retiring their high cost small term debts. The expansion of the fleet was to be last step towards the restructuring plan of the airline but the government thinks otherwise.

According to sources, the government is in a hurry to clear the expansion and even asked Indian Airlines to take up buying up of ATR-40s in its next board meeting. Air India officials say that the ministry8217;s pressure on the airline to buy aircraft is may not be beneficial to the airline8217;s financial health.

This is not the first time Air India is going through the evaluation of any aircraft. Earlier, for more than five years, the government sat over the MCLR project even as the foreign airlines deployed these aircraft on Indian routes.

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The Union Civil Aviation Ministry8217;s plans to infuse another Rs 1,000 crore to the loss-making airline Air India with a rider thatthe airline should expand its fleet is causing concern among airline circles. 8220;It8217;s the repayment of our short-term expensive debts of Rs 1,100 crore which was our top priority but the ministry is bent on expanding the fleet,8221; top Air India officials said.

Similarly, the civil aviation minister Ananth Kumar is also keen that Indian Airlines should acquire small aircraft which will be a loss-making venture for the airline as per feasibility studies made by them. 8220;Indian Airlines should retire its 22 old Boeings and Airbus 300 bought in 1970s8230; but we are being asked to buy ATRs which everyone knows will lose money,8221; a top Indian Airlines official told The Indian Express. Both Air India and Indian Airlines are facing a dilemma.