The Hindu : IA proposal for aircraft acquisition cleared

Online edition of India's National Newspaper
Friday, Jun 13, 2003

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National

IA proposal for aircraft acquisition cleared

By Vinay Kumar

NEW DELHI JUNE 12. The first hurdle for procuring new aircraft for Indian Airlines was cleared today with its proposal getting the nod of the crucial pre-Public Investment Board (pre-PIB) meeting.

At the meeting here, it was decided to give the go-ahead to the State-owned domestic carrier to work on its project report for acquisition of 43 aircraft at a net cost of Rs.10,089 crores spread over the next five years.

Sources in the Civil Aviation Ministry said the IA had been asked to rework the cost of the procurement of the new aircraft as the rupee had strengthened against the dollar. As a result, the cost is likely to go down by one per cent.

The meeting was presided over by the Additional Secretary and Financial Adviser of the Civil Aviation Ministry and attended by senior officials of the Planning Commission and the Indian Airline's Chairman-cum-Managing Director and the Deputy Managing Director. The last pre-PIB meeting had failed to take any decision and it had been postponed last month.

After the pre-PIB stamp of approval, the IA proposal would need the clearance from the PIB, a secretary-level body having representation from the Prime Minister's Office, Finance and Commerce Ministries and other relevant departments. Even if cleared by the PIB, it would need the nod of the Cabinet Committee on Economic Affairs (CCEA) before being formally given the go-ahead for issuing the Letter of Intent (LoI) to the selected aircraft manufacturer.

The procedural formalities may witness the entire exercise taking up a few more months. Sources indicated that it could well be a year before the Indian Airlines gets to induct the new aircraft in its fleet.

Initially, the induction of new aircraft was scheduled for mid-2004 but it seems unlikely that it would materialise before the end of 2004. The date of the PIB meeting is yet to be decided, sources said.

The Indian Airlines had submitted a project report to the Civil Aviation Ministry in April 2002 for acquisition of 43 aircraft comprising A-319, A-320 and A-321 from Airbus Industrie during the period 2003-04 to 2007-08.

The acquisition would replace the entire fleet of old aircraft and for capacity expansion. Since then, the IA's report had been under consideration of the Ministry. The carrier plans to acquire 19 Airbus A-319, 20 Airbus A-321 and four Airbus A-320 aircraft in a phased manner.

During the last five years, the Government has not purchased any aeroplane either from the European consortium, Airbus or the U-S-based Boeing. With the September 9, 2001 terrorist attacks and now the SARS outbreak hitting the civil aviation sector globally, any move for ordering new aircraft by a carrier evokes keen interest and fierce competition between the two companies.

Air India too has plans to place order for 17 aircraft for meeting its medium-capacity long-range and short capacity small range requirements. The AI deal is also worth Rs. 10,000 crores.

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