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

The missing men in India`s family planning story

Every pregnancy requires two people. Yet India`s family planning programme continues to ask only one of them to bear almost all of its medical consequences. The newly released National Family Health Survey-6 (2023-24) confirms just how entrenched this asymmetry remains: 36.5% of currently married women a

`Development must be judged beyond GDP, with rights and justice at core`

Delivering the IXth Chief Justice M.C. Chagla Memorial Lecture on ‘Human Rights and Sustainable Development Goals’, in Mumbai Friday,  former Chief Justice of India Bhushan R. Gavai questioned whether conventional economic indicators such as gross domestic product (GDP), national income,

RTI exposes Rs 16,909 crore cost blowout on Mumbai-Goa Highway

Seventeen years after the centre first approved the widening of National Highway 66 between Mumbai and Goa into a four-lane highway, a fresh RTI reply has revealed a sharp escalation in the project`s sanctioned cost.   According to the RTI reply obtained by activist Jeetendra

"India`s semiconductor ecosystem is expanding rapidly"

Prime minister Narendra Modi on Thursday inaugurated SEMICON India 2026 in New Delhi. Addressing the occasion and highlighting the significance of the event`s fifth edition, the PM drew a parallel between the launch of Semicon India and Vishwakarma Diwas. He pointed out the beautiful coincidence of

Cabinet approves raising EPFO wage ceiling from Rs.15,000 p.m. to Rs.25,000

The union cabinet, chaired by the prime minister, has approved the proposal of the Ministry of Labour & Employment to enhance the wage ceiling for mandatory coverage under the Employees’ Provident Fund Organisation (EPFO) from Rs.15,000 to Rs.25,000 per month. The decision is expected to bring

UPI continues to remain free for peer-to-peer transactions: Finance Ministry

The new UPI framework introduced has no impact on any person to person transactions, and UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred, the finance ministry clarified on Tuesday.   Payments to merchan

Upcoming Conferences



-->

Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter