The Hindu : Only the first step

Online edition of India's National Newspaper
Tuesday, Nov 18, 2003

Opinion

Opinion - Editorials

Only the first step

THE AIR INDIA Board's clearance last week for the acquisition of 28 aircraft marks the first step in a long-drawn programme of fleet replacement and augmentation. Coming on the heels of a more ambitious move by Indian Airlines to purchase 43 aircraft, the whole exercise must be seen as an attempt by the Government finally to push through the much-delayed fleet renewal plan. Each of these packages will cost over Rs. 10,000 crores, but the funding scheme will have to be tied up with the Government and the aircraft manufacturers. Air India is looking at a combination of 10 long-range and 18 short-range aircraft, and to achieve a reasonable political balance — a mix of Europe's Airbus with U.S.-made Boeing aircraft. On the other hand, Indian Airlines has preferred to go in for various versions of the Airbus itself, to renew and even enhance its fleet. While the processing of Indian Airlines' proposal has gone a step further than Air India's and entered the pre-Public Investment Board stage, it will be useful for the Civil Aviation Ministry to move the two proposals together and see them through to fruition.

There are several factors that have contributed to a significant delay in the decision-making process for acquisition of new aircraft for the two national carriers. At least two Governments have sat over these proposals. The fact that the two airlines were in the red for a few years added to the inaction. Air India's perspective plan envisages the phasing out of some of the older high-capacity aircraft such as the Boeing 747 — there are now 12 of these in a fleet of 27 — and going in for medium capacity ones to cater to lower density routes. Air India has therefore preferred a new edition of the Airbus — A 340-300 E — along with the newer version of the Boeing 737-800s. These will be variants for its stable. But Indian Airlines has expressed a preference for the Airbus A-319, A-320 and A-321, which are of the same family as the A-320 aircraft that now dominate its fleet. A determining factor for Indian Airlines seems to be the need for trained pilots to fly them. Given the complicated and costly training programme for commanders and co-commanders, the domestic carrier did not want to get into a situation where it would have had to start from scratch. Hence this predilection for the same family of aircraft.

Considering that the combined aircraft deal is worth over Rs. 20,000 crores, it is imperative that the Aviation Ministry makes the process of acquisition transparent all the way. Given the burgeoning foreign exchange reserves now and with competing aircraft manufacturers guaranteed to offer attractive packages, funding should be no big deal. The real challenge is to see that the deal remains entirely clean and advantageous to the nation. The two airlines have to survive the competition that can only intensify with the new open skies policy. It could take up to a year, once the finances are tied up and the orders are placed, for the aircraft to arrive. Air India and Indian Airlines could certainly use that time profitably to work out a detailed action plan with a focus on synergy, so that they do not have to compete with or under-cut each other on the same routes. It is time for the Government to fix the niche markets for the national airlines and designate them as regional and international airlines.

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