IA plan takes flight on 43 aircraft

The Indian Airlines (IA) proposal for the biggest ever expansion of fleet — earlier on hold due to the disinvestment process — is ...

The Indian Airlines (IA) proposal for the biggest ever expansion of fleet — earlier on hold due to the disinvestment process — is now being considered by the government. IA sent a detailed proposal for acquisition of 43 new aircraft from Airbus, at a cost of Rs 10,089 crore, after it received the go-ahead from the Finance Ministry. The final clearance, however, could take some time since the government is now doubly cautious, with the last IA deal with Airbus in 1986 still under CBI probe.

But according to IA officials, a green signal by the Finance Ministry is half the battle won as the Ministry has to release Rs 325 crore as equity to be paid in the form of margin money by IA.

Civil Aviation Minister Syed Shahnawaz Hussain said the proposal was under consideration and that the government was trying to ensure transparency in the deal. There had been allegations of kickbacks by Airbus in the last deal signed in 1986 for purchase of 31 A-320s, and in September 2000, the Delhi High Court had directed government to stop dealing with Airbus if they did not provide details about it. In fact, government had been so cautious following the Airbus deal that it scrapped an AI proposal for purchase of 22 medium capacity long range aircraft in 1996.

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The present deal could be finalised only after the project was cleared at three levels — the pre-Public Investment Board (PIB), the PIB and the Cabinet. IA officials preferred to be tight-lipped saying the issue was ‘‘too sensitive.’’ But sources said the IA board had recommended that government send the project report and background paper to the Comptroller and Auditor General and Central Vigilance Commission for scrutiny.

The IA board had cleared the biggest ever proposal for aircraft acquisition on March 27 and then sent it to the Ministry. The plan, according to IA sources, was to lease 43 modern jets from Airbus over a period of five years. ‘‘The A-319s will replace the fleet of 11 Boeing 737-200 aircraft being flown by Alliance Air — a subsidiary of IA. Fifteen of these are expected to come in the first phase. And then will come A-321s to replace the A-300s on some trunk and international routes. The Boeing 737s and A-300s will be phased out,’’ said an IA official. Following that, a committee headed by Dr Vijay Kelkar, then Secretary in the Ministry of Petroleum and Natural Gas, was constituted to probe reasons behind IA’s losses, and ways to tackle it. Along with restructuring of IA, it had recommended financial support of Rs 475 crore by the government.

Disinvestment of the state-owned airlines now seems to have been put on the back burner. Minister for Disinvestment Arun Shourie said: Though the airlines are always included in the formal list of enterprises to be disinvested, there is no active work going on as regards to their disinvestment.’’

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