Patel seeks CVC’s help

According to sources, the consultations pertain to the fleet renewal programme of Indian Airlines, which was approved two years ago. The IA board had, on the basis of the recommendation of its expert committee, cleared the purchase of 43 aircraft — 20 Airbus 321s, 19 Airbus 319s and four Airbus 320s — at a cost of about Rs 10,000 crore.

The plan has already been cleared by the Ministry, and is now slated for approval by the Public Investment Board (PIB). But after the change in government, sources said, the new Civil Aviation Minister Praful Patel is keen on ensuring that the best price is quoted for the deal.

After the IA Board’s approval, Boeing Corp offered to provide the same at a cheaper price, which would reduce the investment by Rs 700 crore. However, sources said, this was not the only consideration for seeking the CVC’s guidance. Right now there is a drop in aircraft prices and it may be sensible to obtain new quotes for the best deal.

While there is an alternate view that the renegotiation on prices could be done after the PIB clearance, sources said PIB is supposed to look into the investment required for the purchase, and there was no logic in clearing the investment if it would have to be altered later.

Patel, who is expected to meet PM Manmohan Singh to discuss the aircraft acquisition plan, is said to be treading cautiously. While a CVC nod may not have been mandatory to renegotiate the price with the lowest bidder, sources said the Minister wants to play it safe.

Meanwhile, there is a possibility of a rethink on A-I’s plan to purchase 10 Airbus 340-300. Sources said A-I may well be one of the last airlines to buy this aircraft as there were chances of Airbus stopping production of this line soon. It may be recalled that in competition with the Airbus A 340-300 was the Boeing 777. A-I officials refused to comment as their board had already submitted its proposal. Both IA and A-I fleet renewal plans involve an expenditure of Rs 20,000 crore.