The Hindu : National : IA plan to buy aircraft may be delayed

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Sunday, Jul 17, 2005

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National

IA plan to buy aircraft may be delayed

Special Correspondent

Patel for GoM on pricing front

NEW DELHI: The Indian Airlines (IA) proposal to purchase 43 passenger aircraft from Airbus Industrie is likely to suffer delay. The $1.9-billion deal hit the roadblock when the Union Finance Ministry raised an objection to a Cabinet note, seeking to know whether the airline was getting the best deal from the European manufacturer.

As a result, Civil Aviation Minister Praful Patel has decided to write to Prime Minister Manmohan Singh, urging him to set up either a Group of Ministers or a Committee of Secretaries to make a last attempt at negotiating the deal at prices lower than what Airbus offered. Mr. Patel said he wanted to ensure transparency in the process.The Public Investment Board cleared the proposal last year and the airline got the nod for negotiating the final price with the Airbus. IA's price negotiation team was also cleared by top Finance Ministry officials.

The proposal was awaiting the final clearance of the Cabinet Committee on Economic Affairs (CCEA) and the file was doing the rounds in ministries for their comments.

Some MPs alleged that Airbus Industrie had cut a deal with Air Asia, a low-cost Southeast Asian carrier, to supply aircraft at a much lower price.

Airbus refused to divulge the price, saying it was bound by the confidentiality clause. It said Air Asia had ordered 100 aircraft and the choice of configuration, engines and accessories also played a crucial role in deciding the price.

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