Tuesday, September 16, 2014

Opening the Pandora’s Box- What Went Wrong with Air India?

The explosive revelations by Vinod Rai, former head of CAG, on Air India's expensive acquisition of aircrafts, has once again opened a Pandora's box and revealed two distinct things. In the first place, it revealed how in the name of policy decisions, some of the most blatant and bizarre decisions were taken which were not in the interest of the nation but invariably they were in the interest of some vested interests. Secondly it also revealed why organizations like CAG need more of enforcement power to correct the anomalies.
What Really Happened with Air India?
However those who thought that the buck with UPA stopped with only the Coal Block allocation scam and the 2G scam, the saga of how the then Civil Aviation Minister Praful Patel literally forced the Air India Board to increase the size of the order for new planes from 28 to a whopping 68 planes at a total cost of Rs 50,000 crore, proved that more surprises are awaiting with respect to suspicious cases of wrong doings during UPA regime. The Air India deal for 68 aircrafts was financed with a back breaking 97% debt proportion, good enough to make a company perpetually bankrupt and mired in debts.
This decision was taken during UPA-1 regime. Not only Air India was made to buy 40 more planes than its original requirement for 28 planes, in the same time Indian Airlines, later named as Indian was also buying 43 aircrafts. While Air India was buying from Boeing, the Indian orders were for Airbus.
Did it help Air India to go for such deals with 97% debt?
In other words, the two state owned carriers were together made to buy 111 aircrafts and then they were merged into one entity thereby creating duplicity of fleet. The merger of Indian and Air India was not just ill conceived but was done in haste without any proper revival plan for the national carriers in place. Today the combined entity named Air India Limited which runs Air India, is in a mess and is one of the worst performing PSUs of the country.
While the former Civil Aviation Minister Praful Patel has been trying to justify his act by stating that it was a collective policy decision, the biggest question that remains unanswered is what kind of a policy decision would allow a company to buy aircrafts which are not needed and that too with a 97% debt component? The Air India deal for huge number of aircrafts certainly, it seems, ended up benefitting many but not Air India.
Brand New Planes bought and then sold off in a few years' time?
If one looks at the kind of planes that were purchased, it included several Boeing 777-200 Long Range intercontinental aircrafts as well as 27 Boeing 787 Dreamliners. The shocking thing is that Air India hardly had much use for so many long range planes and eventually it sold 5 of those aircrafts to Etihad Airways.
Now the question is which sensitive organization in rational sense would buy brand new aircrafts and then sell them at one-fifth of the price unless the case is of the company being forced to buy the planes by some vested interests? Something equally shocking is the fact that even when so many intercontinental planes were being bought by Air India, the Ministry was handing over lucrative overseas flying rights to foreign players instead of getting them utilized by Air India.
16/09/14 Pathikrit Payne/One India
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