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Rediff.com  » Business » Govt defends AI buying 111 aircraft

Govt defends AI buying 111 aircraft

September 09, 2011 17:38 IST

Air India aircraftGovernment on Friday defended the acquisition of 111 aircraft by Air India which was severely criticised by the CAG, saying it was a collective decision and all due processes were followed by it and the airline.

Responding to the CAG findings, officials also indicated that Air India's aircraft acquisition plan had come in the backdrop of a 'failed disinvestment exercise' by erstwhile National Democratic Alliance regime as also the liberal opening up of the sky during the six-year rule by the Bharatiya Janata Party-led coalition.

In a pointer to the National Democratic Alliance government, Civil Aviation Minister Vayalar Ravi said it was in 2002 that the government had decided to acquire more aircraft for Air India with the airline board's approval.

The decision to enhance AI fleet came after Tatas withdrew from the race to pick up stake in the national carrier in December 2001.

Justifying the aircraft order in the face of growing air traffic, Ravi told PTI that in March 2004, the combined fleet strength of the erstwhile state-run carriers Air India and Indian Airlines was 93.

"Even after Air India Express coming into being, the fleet strength now is only 81".

With the CAG report likely to come up in the next few weeks before the Public Accounts Committee of Parliament headed by senior Bharatiya Janata Party leader Murli Manohar Joshi, official sources said on Friday all due processes for the fleet purchase were followed by Air India and the government.

"All decisions regarding tenders, evaluation and negotiations with L1 (lowest) bidder were carried out as per extant procedure", the officials, who refused to be identified, said.

The Comptroller and Auditor General had criticised the government on the fleet acquisition exercise financed almost entirely through debt.

It had said, "This was a recipe for disaster ab initio and should have raised alarm signals in Civil Aviation Ministry, Public Investment Board and the Planning Commission".

An Oversight Committee headed by former CAG C G Somiah was also set up to keep a tab on Air India's fleet acquisition process, apart from the monitoring by the empowered group of ministers and the Cabinet Committee on Economic Affairs, the sources said.

At the time of approving the acquisition plan, the government was 'fully aware' of the negative net worth of the two erstwhile public sector carriers, the sources said, adding that hence, it decided to provide sovereign guarantee for the aircraft purchase order.

They said it was surprising that the CAG had relied on a document which was not part of the government's submission but prepared by a committee of a private business body, which had Air India's competitors as members.

Regarding corrective measures and recommendations of the CAG to turnaround the airline, the Aviation Minister said he had started making "course corrections" even before the CAG report was tabled.

The government in the recent past had infused additional equity worth Rs 3,000 crore (Rs 30-billion) worth besides overhauling the top management of the ailing national carrier, he said, adding that more measures were on the anvil to strengthen the airline.

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