PAC slams Air India for acquiring planes through debt

Posted By: Pti
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Air India
New Delhi, Jan 22 : 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.

"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. 

However, the IAG spokesperson said, "Our aim is to be a However, the IAG spokesperson said, "Our aim is to be a global airline group and we are pleased with any steps towards liberalisation of the aviation industry". Qatar Airways CEO Akbar Al Baker reportedly said that the climate for airlines to invest in India should be "conducive to proper business processes... We will not go to India just to be a partner. We are going to help them become more profitable, to get further investment, further capital, but then we also need to have returns". Al Baker was quoted in media reports as having said at a Bahrain Air Show briefing three days ago that any investment in India would also depend on the target carrier's cost structure and organisation.

Kuala Lumpur-based Air Asia said it would examine all options, including setting up a subsidiary airline in India, rather than look at investing in an Indian carrier.

Its CEO Tony Fernandes said, "Some Indian companies will require a lot to be recapitalised. However, since the news is new we will examine all options."

Singapore Airlines Vice-President (Public Affairs) Nick Ionides said the airline keeps all investment options open but added that there were no discussions taking place on the purchase of stake in an Indian carrier.

"We aren't in a position to comment on hypothetical questions." Meanwhile, official sources said there would be no automatic approval for foreign airlines wanting to invest in a domestic carrier.

The proposal would be cleared by the inter-ministerial Foreign Investment Promotion Board (FIPB) which is likely to consider a variety of issues, including the source of funds and security issues, before granting clearance to foreign carriers investing in Indian airlines.


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