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PAC slams Air India for acquiring planes through debt

Jan 22, 2012 12:27 IST

#Debt   #Indian Airlines   #NewsTracker   #PAC  

New Delhi: Questioning the timing of merger and fleet acquisition when Air India was under heavy debt, Parliament's Public Accounts Committee has asked the airline to submit all documents related to the issue within a week.

Top officials of Air India and erstwhile Indian Airlines faced some tough questioning by the Parliamentary panel which also slammed them over complaints of poor passenger services.

The grilling was based on a recent CAG report on Civil Aviation which had said that the decision to acquire 111 planes by Air India through debt was "a recipe for disaster" and should have raised an alarm in the government.

Air India officials told the PAC that it was their idea to merge the two carriers as the 'open sky' policy had increased competition in the aviation sector. They also said that since their fleet at that time was ageing, they had thought of acquiring new planes and believed that merger will provide them greater strength to compete in the new environment.

Top officials of Air India and erstwhile Indian Airlines faced some tough questioning by the Parliamentary panel. Reuters

"They have been asked to submit all documents on merger and fleet acquisition from the conceptual stage onwards to the committee," a member said.

The officials were grilled on their plan to acquire 50 aircraft which quickly got the government's nod recently, while their earlier plan to buy 18 additional planes could not materialise even after six years.

The officials are learnt to have told the Committee that the proposal to purchase 18 aircraft was a short-term move whereas the proposal to induct 50 planes was a long-term plan which had the approval of the board.

"They said the file went from bottom to top and got cleared," a committee member said quoting the officials. Air India officials refuted suggestions that they had shut down profitable routes and assured the Committee to provide it with details to support their claim.

Officials of the erstwhile Indian Airlines were grilled by the PAC members for their "poor" passenger service. The AI officials included KM Unni, S Venkat and FJ Vaz dealing with airframe, finance and commercial operations, respectively, besides representatives of erstwhile IA — Vipin Sharma, Deepak Brara and V Bhandari.

In its latest report tabled in Parliament in September, the public audit body also called the merger of two erstwhile state-run carriers — Air India and Indian Airlines — "ill-timed" and said that "the financial case for the merger
was not adequately validated prior to the merger".

The report also dealt with several aspects of the ailing national carrier's losses, fleet acquisition, merger, huge debt burden, delay in joining the global airline grouping Star Alliance and its financial and operational performance.

PTI

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