The Hindu : Aircraft acquisition process gets off the ground

Online edition of India's National Newspaper
Thursday, Apr 17, 2003

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National

Aircraft acquisition process gets off the ground

By Vinay Kumar

NEW DELHI APRIL 16. With the Union Cabinet striking off the names of Air India and Indian Airlines from the disinvestment list, the first step has been taken towards kickstarting the process of new aircraft purchase for the two State-owned carriers.

With the first stumbling block getting out of the way, the Government could give a serious thought towards shaping the future of the two designated carriers. While AI has plans to acquire 17 new aircraft, IA has projected the need to purchase 43 aircraft. The deal for both the airlines is likely to run into approximately Rs. 20,000 crores as and when it is finalised.

At a time when the civil aviation industry is hit hard by the global spread of Serious Acute Respiratory Syndrome (SARS) and the war in Iraq, both AI and IA appear to be fortunate enough to be taken off the disinvestment list. When large airlines such as the American Airlines of the United States are tottering on the brink of bankruptcy, any move for expansion and acquisition of new aircraft is like music to the ears of the aviation sector passing through a turbulent phase.

The Civil Aviation Minister, Syed Shahnawaz Hussain, has been making out the case for taking AI and IA off the list of undertakings earmarked for disinvestment. Key officials of the Civil Aviation Ministry have said that massive investments for acquisition of new aircraft for AI and IA could not have gone simultaneously with disinvestment in the two entities.

Official sources said the next step would be to cross the hurdle of the pre-Public Investment Board (pre-PIB) which could be held this month itself to clear the IA's proposal for fleet acquisition. After it, the proposal would be sent to the PIB, then to the Cabinet Committee for Economic Affairs (CCEA) and finally to the Union Cabinet for approval. Even when the IA Board has already given the go-ahead to the proposal of the European consortium of Airbus Industrie for a phased induction of the new Airbus family of passenger aircraft, the decision-taking process may well take a year. It will not be before mid-2004 that IA can hope to induct new aircraft in its fleet.

In respect of IA, the Government has already extended the offers from aircraft and engine manufacturers. The domestic carrier has made losses over the last two years — Rs. 159.17 crores in 2000-01 and Rs. 264.75 crores in 2001-02. In 2003-04, the operating loss is estimated to go down by Rs. 128 crores to Rs. 25.50 crores.

AI has made known its requirement of 10 aircraft on a firm basis and option for seven more in order to retain the flexibility of selecting an improved version of aircraft at a later stage. It also wants to go for smaller aircraft of 150-seat configuration for servicing the South-East and Gulf sectors.

The technical sub-committee is likely to soon apprise the AI Board of its assessment before handing it over to the Civil Aviation Ministry for clearance. While AI suffered a loss of Rs. 44.40 crores during 2000-01, it earned a profit of Rs. 15.44 crores in 2001-02.

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