..:: India Strategic ::.. Unsure whether to go ahead with Boeing purchase: India

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Editorial

Unsure whether to go ahead with Boeing purchase: India

Published: September 2011

New Delhi. Even as the official auditor attributed Air India's massive fleet expansion plan as one of the major reasons for its financial woes, Civil Aviation Minister Vayalar Ravi said the national carrier had no money to pay for the 27 Boeing 787 aircraft expected to be delivered by year-end.

Of the 68 Boeing aircraft ordered in 2005-06, 27 were long haul B787s. The Comptroller and Auditor General of India (CAG), which reviewed this deal and another order for 43 Airbus planes for the erstwhile Indian Airlines termed the acquisition process ill-timed and driven from the top.

When asked about the deal, Ravi said the airline's finances were in a mess and the government had not decided yet whether to confirm the deal or call it off as it could not pay for them. The delivery of these planes has also been delayed for over three years.

"I don't have the money to pay. I cannot beg the finance minister all the time for the money. It is difficult, this is the position now," Ravi told television channels.

"The government cannot say we are confirming or we are rejecting, the workers also know that now... but it is not delivered so far, we have not paid so far. I don't have the money to pay for it also," the minister added.

Air India and Indian Airlines were merged in April 2007 into the National Aviation Company of India Ltd. (NACIL), which has since been renamed as Air India.

The CAG said the initial proposal to acquire aircraft was made in 1996. But soon after the United Progressive Alliance (UPA) government assumed office in 2004, the procurement process picked up and the deal was wrapped up in seven months.

The deal also saw Air India altering the acquisition plan, at the behest of the civil aviation ministry, from buying 18 small capacity short-range aircraft and 10 medium capacity long-range planes in January 2004 to 50 medium capacity long-range aircraft in November 2004, taking the total requirement tally to 68.

The CAG's report deals with the period the Nationalist Congress Party's Praful Patel was the civil aviation minister. Patel is now the heavy industries minister.

Reacting to the report, Patel told reporters on Thursday: "In 2004, Air India and Indian Airlines had 93 aircraft, most of which were 20 years old. There was no way the airlines could have withstood the global competition with these planes."

"Whatever the government did in its wisdom was to make the airline commercially viable. We had to decide immediately as to whether new planes should be bought otherwise the airline would have closed down," Patel had said. (IANS)