A-I, IA told to submit new fleet plans

The government has scrapped Air-India (A-I) and Indian Airline's (IA) fleet acquisition proposals. Around a fortnight ago, Civil Aviation Minister Praful Patel wrote to the two national carriers asking them to dump their respective fleet acquisition plans.

They will now start afresh on aircraft acquisition proposals, keeping in mind the their 10-year business plan, two airline sources close to the development separately confirmed to Business Standard.

Air-India Express, the budget arm of A-I, will also have a separate fleet plan.

Airline industry sources said the original fleet acquisition plan was conceived over two years ago and some of the aircraft that were to be acquired are now obsolete and have no resale value.

They added that A-I needed ultra long haul aircraft to compete with airlines like Emirates, Singapore Airlines and British Airways on the lucrative India-US sector.

Patel's decision has profound implications for the two airlines' plans because coming up with entirely new aircraft acquisition plans and obtaining government approval for them will take around a year or two. Also, IA's deal with aircraft manufacturer.

Airbus Industries to buy 43 aircraft may be cancelled. IA's fleet acquisition proposal had reached the Cabinet approval stage after over two years of deliberation and discussion. The IA board had cleared the proposal last year.

The two carriers' proposals to buy new aircraft have gone through several twists and turns ever since the UPA government assumed office.

Both airlines were first asked to alter the portfolio of the aircraft they wanted to acquire, while retaining the essence of their respective proposals.

Patel asked A-I to induct more ultra long-range aircraft so that it could launch direct flights to the US. The minister also asked IA to induct wide-bodied aircraft with twin aisles, to be deployed on the Gulf and other sectors.

The ministry later decided that aircraft acquisition would take place in two phases, with the new additional aircraft being acquired in the second phase.

Patel's latest move implies that IA, A-I and Air India Express can jointly seek to buy or lease aircraft so that the airlines will have bargaining muscle with aircraft manufacturers, according to an airline source. However, he added that no decision had been taken on the matter.

A-I's original fleet plan envisaged the acquisition of 28 aircraft (10 long range Airbus 340-300 and 18 short range Boeing 737-800s) at a cost of Rs 10,000 crore in Phase I.

It was planning to buy more than 25 long-range planes in the second phase after it decided to pass on the 18 medium-capacity short-range aircraft (Boeing 737-800s) it had planned on acquiring in the first phase of its aircraft acquisition programme to Air-India Express.

These plane were to be inducted over 4-5 years after the plan was approved by the government and orders placed with aircraft manufacturers.