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Aviation ministry counters CAG’s charges

* Ministry questions CAG’s reliance of travel estimates prepared by industry body CII,calls it doubtful.

Written by ENS Economic Bureau | New Delhi |
September 10, 2011 1:06:13 am

A day after the government watchdog’s report slamming aircraft acquisition,the civil aviation ministry defended the Rs 41,000 crore aircraft deal for Air India,its bilateral policy and blamed the Comptroller and Auditor General (CAG) for lack of understanding of the complexities of the aviation sector.

“The decision to acquire aircraft for both Air India,Indian Airlines and Air India Express was based on an urgent need to replace the ageing fleet(almost 20 years) and building capacity for future growth in view of fierce competition both domestic and international carriers,” top ministry sources told The Indian Express. They called the CAG report contradictory as on one hand it said the process took unduly long time from 1996 onwards and on the other it said the process was speedily concluded. “All due processes for acquisition were followed by AI and government,”said the source.

The government,fully aware of the negative net worth of both the airlines,had agreed to provide sovereign guarantees at the time of acquisition,the source said. The ministry debunked charges that a large number of aircraft have been acquired by the carrier. “The net number of wide body aircraft in Air India,20,is much less than what it was before the acquisition process,” the source said.

On CAG’s charge that the foreign carriers were allowed to increase flights to and from the country,causing considerable loss to Air India,the ministry said that it had to consider “the needs of the travelling public of country” based on India’s economic,geo-political,strategic and other interests. “India is directly connected to only 50 countries of the world either by Indian or foreign carriers. The other 140 countries of the world can be accessed through international hubs like Dubai,Singapore,Frankfurt,London,Paris,Hong Kong to name a few. Travelling through these hubs to other non-connected countries is imperative,”said the source.

It questioned CAG’s reliance on travel estimates prepared by Confederation of Indian Industry. “Some participants of this paper were the competitors of Air India and had commercial interest in preparing this paper,” the source said. The ministry called this data “doubtful in the absence of its veracity or verification”.

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