Airbus ready for discount in IA deal

Indian negotiators led by Finance Minister P Chidambaram today managed to extract a discount from European aircraft maker Airbus Industrie on the 43-aeroplane Rs 10,089-crore deal for Indian Airlines. The negotiations will continue tomorrow.

Although the exact nature of the discount is not known, a government functionary said certain conditions in the deal had been changed to make it better for the Indian carrier.

Even though there may not be a change in the price of the aeroplanes, discounts are expected to come by way of spare parts, the servicing schedule of the aircraft, training of pilots and cabin crew, and the delivery schedule.

Aircraft deals typically involves these components, based on which the final deal prices are arrived at. India has been demanding discounts from Airbus on various accounts ever since the deal was approved by the airline's board in 2002. Criticism has come from various quarters on the final price and it was also pointed out that airlines from other countries had managed to get the planes at lower prices.

"The first round is over. The discussions will continue tomorrow and a final decision will be taken," Civil Aviation Minister Praful Patel said after the meeting of the empowered group of minister (EGoM).

The other members of the EGoM are Law minister HR Bharadwaj and Minister for Programme Implementation and Statistics Oskar Fernandes. Airbus Industrie was represented by Kiran Rao, its global sales and marketing head for passenger aircraft, who refused to comment on the negotiations.

"Once the deliberations are concluded, the EGoM will meet to finalise the government's stand," Patel said when asked if the government would scrap the deal if the discounts offered by Airbus were not satisfactory.

The EGoM was set up last month to undertake one last round of negotiations with Airbus to bring down the price.

Indian Airlines has shortlisted Airbus to buy 43 aircraft, a combination of 19 Airbus A 319, 20 Airbus A 321 and four Airbus A 320 aircraft.