The Hindu Business Line : Govt keen on best price for AI, IA fleet

THE top brass of Air India (AI) and Indian Airlines (IA) can now breathe easy. While the Government is keen to ensure that the two State-owned airlines get the best price for the aircraft they plan to acquire, there are no plans to ask them to seek fresh bids from the aircraft manufacturers.

Official sources told Business Line that the Government is keen to negotiate the best possible price when they work out the final price with the L1 bidder or the manufacturer who has bid the lowest price for the project.

Sources said that the Ministry of Civil Aviation is unlikely to ask the two airlines to review the orders unless they themselves come up with such a specific request.

Officials maintain that the final price for the fleet acquisition plan of the individual airline will become clear only when both the officials start negotiating the nitty-gritty. It is at that time that the Government will be keen to ensure that the airline work out the best possible price, keeping in mind the global trends in movement of aircraft prices.

While the IA board had approved a proposal to acquire 43 Airbus aircraft at an estimated cost of more than Rs 10,000 crore in March 2002, the AI board approved a proposal to acquire 28 aircraft, including 10 Airbus A-340-300 and 18 Boeing 737-800 aircraft, only last year. Both the airlines are awaiting Government approval before negotiating with the aircraft manufacturers on the final pricing and purchase of the aircraft. There has been speculation on whether a re-bid would get a better price for the two airlines, especially since there has been a considerable time-lapse since the bids were approved by the board.

Interestingly, since the time the IA board approved the aircraft acquisition proposal not only has the US aircraft manufacturer, Boeing, written to the airline offering a saving of Rs 700 crore, but there have also been reports of the same movement in the global prices of aircraft due to the effect of September 11 on the industry.

Commenting on the fleet acquisition plan at a press conference in Delhi recently, the Minister for Civil Aviation, Mr Praful Patel, said: "There could be some issues, we feel we could get better pricing. We will definitely want a fresh look. But that does not mean that we will reverse the decisions taken by the previous Government. No firm decision has yet been taken on the matter. However, one thing is certain, the process will be completed in 2004 as both the airlines require aircraft."