AI plane acquisition was necessary to survive competition: Patel

CAG has questioned govt decision to acquire 111 planes for Air India through debt.

Praful Patel,who headed the Civil Aviation Ministry in the UPA-I government,today defended the decision to acquire 111 planes for Air India,saying there was no other way for the airline to compete internationally at that time.

8220;In 2004,Air India and Indian Airlines had 93 aircraft,most of which were 20 years old. There was no way the airline could have withstood the global competition with these planes,8221; Patel,who is now the Heavy Industries Minister in UPA-II,told reporters here.

His comments came soon after the Comptroller and Auditor General CAG questioned the Civil Aviation Ministry8217;s decision to acquire 111 planes for Air India through debt,calling it 8220;a recipe for disaster8221;.

Terming the move for acquiring a 8220;large number8221; of planes as 8220;risky8221;,CAG in its report tabled in Parliament today,said the aircraft acquisition had 8220;contributed predominantly8221; to the airline8217;s massive debt liability of Rs 38,423 crore as on March 31 last year.

8220;Whatever the government did in its wisdom was to make the airline commercially viable. We had to decide immediately as to whether new planes should be bought otherwise the airline would have closed down,8221; Patel said.

He added that if 17 months of completing the aircraft acquisition process is steering hurry,8221;then let us fix some time frame for this process to happen.8221;

Patel said that the entire ambit of the government,including the Planning Commission and the Public Investment Board,was involved in the process of fleet acquisition.

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The government had also given the sovereign guarantee for this process. Otherwise all airlines have their own funds to buy aircraft,he added.

Further,he termed the entire report as 8220;full of contradictions8221;,and said the Civil Aviation Ministry would suitably reply to the Public Accounts Committee PAC on allegations being made by the Opposition.

The CAG said that the entire acquisition for both Air India and Indian Airlines was to be funded through debt to be repaid through revenue generation,except for a relatively small equity infusion of Rs 325 crore for Indian Airlines.