PMO monitors IA fleet plan

The Prime Minister's Office (PMO) has stepped in to keep a close watch on the Rs 9,475 crore fleet acquisition plan of Indian Airlines.

According to sources, the report of the committee set up to oversee the price with Airbus Industrie, will be presented to the PMO shortly.

The price negotiations committee, set up to hold consultations with Airbus also met here today. The committee's report is also expected to be closely scrutinised by the government.

"Once the report of the price negotiations committee comes, it will be examined and subsequently be forwarded to the Cabinet Committee on Economic Affairs for its approval," said the source.

Sources said the price negotiation committee has been in touch with Airbus on pricing, schedule of delivery, availability of parts and training of pilots and engineers.

Sources also said the government had been pushing for a reduction in the aircraft order price by at least Rs 900 crore. However, the delivery pricing of the aircraft will be finalised soon.

Besides, the government also wants the aircraft maker to agree to a higher counter purchase contract. According to sources, the government wanted the aircraft maker to undertake counter-purchase to the tune of 30 per cent of the total value of the contract.

If a consortium of companies, including aircraft makers, aircraft service providers and aircraft engine makers get the project, each party will have to undertake counter purchasing to the tune of 30 per cent of their contract value from India.

According to sources, this has been done to ensure that the companies, which bag the contract, will invest back in India in terms of setting up their own facilities or give contracts to Indian companies.

In addition, the government wanted to push for a faster delivery of aircraft and better availability of spare parts and easier conditions for providing training to pilots and engineers. Indian Airline's plan to acquire 43 aircraft to modernise its ageing fleet, was approved by the public investment board in November 2004.

The board then set up the price negotiations committee to negotiate with the aircraft maker. The new aircraft will be inducted into its fleet in a staggered manner over five years.

The previous aircraft acquisition by Indian Airlines was in 1989, when it acquired 30 Airbus A 320s to expand its fleet.