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Tuesday, Nov 23, 2004

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Opinion - Editorial

Plane dithering

THE RECENT NOD from the Public Investment Board (PIB) for the state-owned Indian Airlines to purchase 43 Airbus aircraft raises another important issue: Acquisition of planes by Air India. Consider the situation till now. The Indian Airlines board cleared the purchase proposal in March 2002 and since then the airline has been waiting for the green signal from the government. Now, after two-and-half years, the airline has moved just a wee bit closer to acquiring the new aircraft. It is, however, quite some way from getting them in the air. For, the PIB has recommended that the acquisition proposal be sent to the Cabinet Committee on Economic Affairs (CCEA) for approval; the PIB's role is primarily recommendatory. So Indian Airlines has merely crossed yet another hurdle to fleet acquisition and no one is willing to hazard a guess when it will start flying the new aircraft.

Similarly, in the case of Air India, the airline board is expected to meet later this month in Mumbai to take a decision on theaircraft it should acquire. But a mere decision by the board does not mean that the airline will be allowed to go ahead with the purchase. The airline proposal will follow the same flight path and require the same governmental clearances as Indian Airlines' proposal before it can purchase the aircraft. Even from the time the two airlines sign up with either of the two aircraft manufacturers — Boeing or Airbus — it would take 12 to 18 months for the deliveries to start. Contrast this with the private sector airlines which are already drawing up plans for acquiring more aircraft not only for flying within the country but also to take advantage of the imminent Government decision to allow them to operate to more international destinations including Singapore, Bangkok, Kuala Lumpur and even points in Europe.

The dithering over aircraft acquisition by the state-owned airlines has resulted in foreign airlines utilising 70 per cent of their entitlements whereas Indian carriers are utilising only 30 per cent of their entitlements. It is not as if the Government does not have options for the state-owned airlines. Last December, the high-power Naresh Chandra Committee had recommended the private placement of shares of Air India and Indian Airlines with financial institutions, domestic and foreign. Besides the Civil Aviation Minister, Mr Praful Patel, recently spoke about the idea of following the NTPC and SBI model and offloading some equity of the two state-owned airlines even while ensuring that the public sector character of the companies is maintained. What is required is for the Government to consider ways of ensuring that both its airlines are in a position to quickly take advantage of the emerging opportunities, ensuring also that the interest of the nation is best protected.

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