PAC slams AI merger, aircraft purchase

The airline’s top brass and the civil aviation ministry have been given a week to submit all relevant documents

sweta-ranjan

Sweta Ranjan | January 23, 2012



Parliament’s public accounts committee (PAC) has asked the civil aviation ministry for the particulars of Air India’s fleet acquisition plan under which the airline ordered aircraft from Boeing and Airbus.

The PAC has demanded the details after a comptroller and auditor general (CAG) report slammed the decision to acquire 111 planes under debt, saying that it was a “recipe for disaster”. The apex auditor had also criticised the timing of the Air India’s merger with Indian Airlines at a time when the former was burdened by losses.

The committee, under Murli Manohar Joshi, had summoned the state-owned airline’s top officials and demanded the official record of the purchase and the merger after deeming the officials’ replies unsatisfactory. A source in the PAC said, “The committee has got unconvincing responses from the officials of AI and the ministry of civil aviation. The panel’s findings are almost in line with those of the CAG. We will scrutinise the officials and the documents we have demanded from the airline and the ministry to get satisfactory details.” PAC has given a week’s time for the submission of the documents.

The officials defended the merger decision saying that the ‘open sky’ policy had led to stiff competition in the aviation sector and the merger had been a financially sound decision to take at the time. The fleets of the two airlines were ageing which is why the fleet acquisition plan had been approved, the officials had told the committee.

Soon after the CAG findings had been made public, the then civil aviation minister Praful Patel had also come out in defence of the fleet acquisition deals saying that they were the need of the time as Air India had to compete at an international level as well.

CAG had said in its report that the purchase of new planes for $11 billion had “contributed predominantly” to the airline’s massive debt liability. It criticised the ministry for approving the orders even when the airline was “deep in the red” and for the decision to finance the orders through debt.

CAG in its report had concluded that “capacity expansion by both the erstwhile airlines (Indian Airlines and Air India) without adequate due diligence by either the companies or the ministry as to requirement and imprudent project financing has put the merged entity into acute financial stress.”

The report squarely blames the ministry in the matter of fleet acquisition noting that its directive compelled Air India to increase one of the order from 28 aircrafts to 68 despite the airline officials’ reservations against such a large order.

 

Comments

 

Other News

A sustainability warrior’s heartfelt stories of life’s fleeting moments

Fit In, Stand Out, Walk: Stories from a Pushed Away Hill By Shailini Sheth Amin Notion Press, Rs 399

What EU’s AI Act means for the world

The recent European Union (EU) policy on artificial intelligence (AI) will be a game-changer and likely to become the de-facto standard not only for the conduct of businesses but also for the way consumers think about AI tools. Governments across the globe have been grappling with the rapid rise of AI tool

Indian Railways celebrates 171 years of its pioneering journey

The Indian Railways is celebrating 171 glorious years of its existence. Going back in time, the first train in India (and Asia) ran between Mumbai and Thane on April 16, 1853. It was flagged off from Boribunder (where CSMT stands today). As the years passed, the Great Indian Peninsula Railway which ran the

Vasudhaiva Kutumbakam: How to connect businesses with people

7 Chakras of Management: Wisdom from Indic Scriptures By Ashutosh Garg Rupa Publications, 282 pages, Rs 595

ECI walks extra mile to reach out to elderly, PwD voters

In a path-breaking initiative, the Election Commission of India (ECI), for the first time in a Lok Sabha Election, has provided the facility of home voting for the elderly and Persons with Disabilities in the 2024 Lok Sabha elections. Voters above 85 years of age and Persons with Disabilities (PwDs) with 4

A fairly reasonable way to solve problems, personal and global

Reason to Be Happy: Why logical thinking is the key to a better life By Kaushik Basu Torva/Transworld, 224 pages

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter