Nod for IA deal with Airbus to purchase 43 aircraft

Airline can now formally place the order with the European consortium

Special Correspondent

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the decision of the Empowered Group of Ministers (eGoM) on the fleet acquisition plan of the state-owned carrier, Indian Airlines.

The airline can now formally place the order with the European consortium Airbus Industrie for the purchase of 43 aircraft at a cost of Rs. 9,890 crores.

The last procedural step for the IA-Airbus deal now is a formal communication from the Civil Aviation Ministry asking the carrier to place the orders for a mix of A-319s, A-320s and A-321s with Airbus Industrie.

Prime Minister Manmohan Singh had approved the deal after it was cleared by the eGoM earlier this month after getting a discount of nearly Rs. 349 crores from the manufacturer.

The Prime Minister had announced the clearance of the deal in the presence of his British counterpart Tony Blair at the India-EU summit here on September 7.

After negotiations between the Government and Airbus Industrie, the deal amount was reduced by 3.4 per cent to peg the entire contract at Rs. 9,890 crores. Airbus had earlier quoted Rs. 10,237 crores for delivering 43 planes — 19 A-319s, four A-320s and 20 A-321 aircraft.

As per the tentative delivery schedule, the first aircraft will join the IA fleet in the second half of next year and the remaining 42 would be inducted at an average rate of one plane a month.

The eGoM, headed by Finance Minister P. Chidambaram, had also managed to get several other concessions and advantages from Airbus Industrie.

Training centre

These included the establishment of an ultra-modern training centre for pilots to fly Airbus family of aircraft at a cost of around $ 75 millions, an MRO (maintenance, repair and overhaul) facility at a cost of $ 100 millions and a counter-trade offer worth about $ 145 millions with France, official sources said. Airbus Industrie also assured the Government that it would establish spare part warehouses in India, not only for IA but for other carriers as well. Though these concessions were not quantified in monetary terms, they are expected to bring in a lot of additional investments and facilities by aircraft and engine manufacturers.

Two rounds of negotiations were held with Airbus Industrie and engine manufacturer CFM — first with the Oversight Committee headed by former Comptroller and Auditor General C.G. Somaiah and then with the eGoM. In the last round of negotiations held in March this year, IA obtained a saving of $ 63.2 millions.

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