Air India aircraft acquisition was necessary: Patel

September 8, 2011 | Business | Written by

New Delhi, Sep 8: Former civil aviation minister Praful Patel defended the acquisition of 111 aircraft for Air India in 2005-06 after a Comptroller and Auditor General (CAG) report tabled in parliament Thursday slammed the government for the purchases.

‘Most of the aircraft with Air India and Indian Airlines in 2004 were 20 years old and there was no way the airline could have withstood competition or survived with these planes,’ Patel told reporters here.

Patel headed the ministry in the first tenure of United Progressive Alliance (UPA-I) and then from 2009 2011 in UPA-II. He is now the minister of heavy industries and public enterprises.

According to Patel, the decision to buy new aircraft had to be taken at the earliest due to the aging fleet of the airline and to make the flag carrier commercially viable.

‘We had to decide on the new planes otherwise the airline would have closed down due to old planes,’ he said.

Patel further said that step was taken keeping in mind the long-term demand and the need to make the airline a more commercially viable entity.

‘The government in its wisdom took the decision to make the airline commercially viable,’ Patel said adding that it took 17 months of finalising the aircraft acquisition in which various departments were involved like the Planning Commission and the Public Investment Board (PIB).

Patel also called the CAG report as ‘full of contradictions’ and said that the civil aviation ministry would give adequate reply to the Public Accounts Committee (PAC) which will look into the report.

The CAG said that the entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs.325 crore for Indian Airlines.

The CAG report slammed the decisions made by the government to buy new aircraft, which was driven by the aviation ministry, and the dismal management practices had led to the downfall of Air India.

Reviewing the decision to buy 68 Boeing aircraft for Air India and 43 Airbus planes for Indian Airlines, the report termed the acquisition process ill-timed and driven from the top, resulting in the airline accumulating a massive debt of Rs.38,423 crore as on March 31, 2010.

IANS