Key files on decision missing, internal investigation determined
An investigation by Air India’s internal vigilance department found the airline lost a staggering Rs. 4,234.28 crore between 2005 and 2010 because it leased 16 aircraft to enhance capacity on routes that were already making losses, documents obtained by The Hindu show.
The investigation, whose findings were submitted for review by Air India’s Board on November 29, 2011, shows the leasing losses accounted for a third of the airline’s total losses of Rs. 13,835 crore.
Earlier, a report by the Comptroller and Auditor-General said the airline had also lost Rs. 68,000 crore because it committed itself to purchasing aircraft far beyond the recommendations of its own feasibility studies.
Air India officials declined to comment on the report. However, in a leaked communication to the Cabinet Secretary that became public earlier this month, the former Air India chief, Sunil Arora, alleged that key decisions had been coloured by “unprecedented” interference by the former Civil Aviation Minister, Praful Patel.
In his May 28, 2005 letter, Mr. Arora said Air India’s Board had been steamrollered into purchasing more jets than required. In some cases, Mr. Arora alleged, even seat configuration requirements had been changed to suit particular manufacturers. Indian Airlines, similarly, had been pulled out of profitable routes to make way for private operators.
Air India’s Board, a briefing note on the investigation prepared for it states, was told a variety of reasons were assigned for leasing aircraft despite the negative returns on the routes, such as protecting slots at airports and maintaining schedule integrity. However, “no viability study was carried out of these futuristic issues vis-?-vis the loss that was going to be caused, which would justify taking the aircraft on dry lease at an estimated loss.”
“From the actual operating results, it is seen that revenue earned by operating leased aircraft was about 50 per cent lesser than the revenues estimated in the Economic Viability Report,” the report states.
“In a particular case,” the note states, “[an] aircraft was taken on fresh dry lease five months before the lease period of the then operating dry leased aircraft came to a close, and that too when this route was making loss. Subsequently, operations on the same route were terminated.”
The note also records that key documents on the decision-making process are missing.
The UPA in its wisdom of "coalition dharma" has presided over so many scams in the past 8 years, that it has very little legitimacy in governance. The UPA looks like an organization of rent seekers who are willing t ply any national resource that they control. The behaviour of its coalition partners has been particularly abhorrent. The DMK sought to make Telecom (and fertilizers previously) its cash cow. The Trinamool has made the railways its instrument of populism. The NCP and Praful patel seem to have made the Ministry of aviation and Air India, their toy to play with and destroy. Patel's actions related to Air India seem particularly flagrant, his daughter diverting commercial aircraft for IPL use; making aircraft acquisitions without heed to practicality or profitability; Forcing decisions on AI to benefit other private players. This must stop. This is another area where we need a performance audit from the CAG.
Two organizations making profit before merger,after merger losses of almost a lakh crores ,the losses which the organizations be attributed to is minimal.Its the Civil Aviation Ministry and the Govt which took the decisions leading to this mess.Wish I could say privatize Govt of India....or is it already privatized!!!!
Not an iota of doubt the politician-business network pushed the airline to its limits. There should be an inquiry into this too. Bring the culprits to book by appropriating their personal wealth which , i am sure would be, well into 000' of crores.
Has Sunil Arora,the co-sinner,turned into an approver? At least,so it seems!He remained stayput at the helm of Air-India/Indian Airlines for long and developed political clout for facilitating his career progression.Now,that secrets were unravelled,he has chosen to switch sides.As CMD,he failed to take corrective steps.Now,he is blaming the former Civil Aviation Ministers for stone-walling the AI/IA Boards?Is this not escapism?The bureaucracy has surely failed in resisting political interference. Was the position ever brought to the notice of successive Cabinet Secretaries?I think, not.
The humungous loss suffered by the national career on account of leasing aircraft to areas already incurring losses speaks of poor fleet management and hamhanded decisions taken at the highest level. Unless accountability is fixed at all levels such losses are likely to occur time and again.
Another scam is coming out in the open. People will now realise the real
culprit for AI's failure to make any profits in the last few years.
When we can privatize the profitable PSU's, why do we need an airline which is
bleeding and most of the private carriers through the world are incurring losses,
there is no way with the govt intervention Air-India will be profitable, this is a sick
unit, they should immediately stop funding this and cede all operations and govt
should divest
Why, why, why are my taxes going toward keeping this loss making giant afloat?? Taxpayer money is probably going into the pockets of corrupt officials and politicians. Air India has been a national disgrace ever since it was nationalized. I would much rather support private air carriers than a so-called 'national airline' that is only there to fly ministers and their families overseas at taxpayer expense.
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