The Hindu Business Line : IA's Airbus fleet acquisition cost shoots up

HOW much will the planned 43 Airbus fleet acquisition cost Indian Airlines? The Minister for Civil Aviation, Mr Praful Patel, recently informed Parliament that the airline had submitted a project report for acquisition of 43 aircraft at a total cost of Rs 10,237 crore.

Interestingly, the project proposal was valued at Rs 10,089 crore, when it was cleared by the airline's board in 2002. However, in November 2004, after the meeting of the Public Investment Board (PIB), the cost of the acquisition came down by as much as Rs 614 crore to Rs 9,475 crore due to exchange rate fluctuations.

Official sources had indicated then that while the US dollar was being quoted at Rs 49 when the board approved the proposal, it was around Rs 46 when the PIB meeting took place, thereby bringing down the cost of the project. However, going by the Minister's statement in Parliament recently, it would seem that the project cost has gone up by Rs 148 crore from the original price at which it was cleared by the board, and by Rs 762 crore from the level at which the PIB approved the project.

When contacted, officials were tight-lipped on why the cost of the project had now gone past the original price estimate. The airline plans to induct 19 A-319s, four A-320s and 20 A-321 aircraft.

While 70 per cent of the 43 aircraft which are to be inducted are for replacing the airline's ageing fleet, 30 per cent is for capacity enhancement.

Among the aircraft that will be phased out are 11 Boeing 737s, 15 Airbus A-320s, which are on lease, and three Airbus A-300s. The last tranche of Airbus A-320s that the airline purchased arrived in 1994, official sources said.

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