Panel on fleet acquisition

Expressing concern over the delay in fleet acquisition by Air India and Indian Airlines, a parliamentary committee said this has "forced" the international flag carrier to sell bilateral agreements to foreign airlines leading to a decline in its marketshare.

Opining that an "atmosphere of uncertainty prevailed due to confusion in the government" on the fleet acquisition programmes of the two carriers, the standing committee on transport, tourism and culture said the delay in the process forced Air India to sell the bilateral agreements to foreign airlines as a result of which the airline "lost its marketshare to 20 per cent, which was at one time 30 per cent."

The committee, headed by senior CPI(M) MP Nilotpal Basu, criticised the government for first proposing to divest its stake in them and later, deciding against it.

While recommending that the proposals of the IA and AI be approved without any further delay, it also suggested that the equity base of the two carriers be "enhanced at the earliest."

The AI has submitted a proposal to acquire ten A-340-300 and 18 B-737-800s aircraft this January, while the IA proposal is for the acquisition of 43 aircraft of A-319, A-320 and A-321s between 2003-04 and 2007-08.

The committee said it was "sorry to note" that there was no proposal from the civil aviation ministry for equity infusion in AI in the "last few years" and whatever efforts were made for the same in IA did not yield any result.

The IA has submitted a request for capital infusion and the Cabinet has decided that Rs 325 crore, as recommended by the Kelkar Committee, would come as additional equity only when it goes for acquiring new aircraft.

Pointing out that the government had made a commitment to contribute to the equity of IA, it said a healthy debt-equity ratio would enable them to go in for borrowings to meet their fund requirements.

Regarding budgetary allocation in the civil aviation sector for 2003-04, the committee observed that only 23.9 per cent of the allocation had been approved for the first two years of the 10th Plan, "which is fairly short of the proportionate 40 per cent allocation that becomes due for this period."

Keeping in view the growing importance of the sector, it recommended that government increase the outlay for the civil aviation ministry and "if need be, supplement the allocation by substantially increasing the gross budgetary support."