The Communist Party of India (Marxist) on Friday demanded a probe by the Central Bureau of Investigation into the state of affairs in Air India, including the role of the former Ministers of Civil Aviation and Finance, following a report of the Comptroller and Auditor-General.
Reacting to the report presented in Parliament, the party Polit Bureau said it clearly indicted the Ministry of Civil Aviation for the situation in which Air India was, with accumulated losses of over Rs.20,000 crore and a debt burden of over Rs.46,000 crore since 2006.
The statement referred to the points underscored in the report, including the increasing number of planes ordered from Boeing and Airbus prior to the merger; the liberalised policy of bilateral entitlements and policy decisions that turned the profit-making corporation into a loss-making debt-ridden entity.
“The CPI (M) demands that this whole matter be investigated by the CBI. The role of the former Minister of Civil Aviation and the former Finance Minister, who chaired the EGoM [Empowered Group of Ministers] that cleared the proposal for acquisition of the aircraft, should be probed,'' the statement said.
As against the earlier proposal to purchase 28 aircraft from Boeing, it was expanded to 68 in a “hasty manner, based on grossly inflated projection of increases in market share and yields” and the deal was signed in 2005 for Rs.33,197 crore.
“This arbitrary expansion of the acquisition plan, financed by loans, has been a significant factor behind the sharp increase in AI's debt burden.”
In the case of Indian Airlines, the Ministry pushed for the acquisition of 43 aircraft from Airbus for Rs. 8,399 crore in February 2006 “with undue haste, ignoring the concerns of several officials on the financial viability of such large scale acquisitions.”
“The merger of Air India Limited and Indian Airlines Limited was initiated in March 2006, immediately after AI and IA had completed independent large scale aircraft acquisition plans from Boeing and Airbus. Had the merger taken place before the separate acquisition of aircraft, a common acquisition process would have saved significant revenues for the airline.”
The policy on bilateral entitlements for international operations was substantially liberalised from 2004-05. This benefited big international airlines such as Emirates to access the Indian market without any reciprocal benefit to Air India.
Route allocations
The CAG report further confirmed the March 2010 findings of the Parliamentary Committee on Public Undertakings that also called for a review of route and slot allocations to airlines in the backdrop of reports “about the public carriers being disadvantaged by the allocation of prime commercial routes to private airlines such as Jet Airways, Kingfisher Airlines and Emirates and also the allocation of time-slots on common routes in such a way that the private carriers would get the bulk of passengers on such routes.”
