Govt weighing options on IA fleet

Ashwini Phadnis

NEW DELHI, Dec. 11

THE Government is likely to take a final view on the funding and the route for obtaining funds for the fleet acquisition plan of Indian Airlines (IA) at a later date, according to senior officials of the Ministry of Civil Aviation.

Official sources told Business Line on Tuesday that the Government was looking at several options including writing off the amount owed to it for the guarantees/commissions provided and writing off other debts so that the capital base of the airlines is further strengthened.

Sources said that the amount owed to the Government under the guarantee/commission head alone would run into several crores, and writing it off would help the airline increase the amount it can access from the open market.

"It would be wrong to say that the Government will contribute Rs 325 crore. The Government decision is clear that the infusion of funds to IA is linked to the fleet acquisition," they said.

"It is possible that the Government, after considering the proposal, may decide to release a lesser amount. Or it may look at other methods to ensure that the airlines is in a better position to raise more funds from the market.''

IA has started the process of fleet acquisition in right earnest by asking the aircraft and engine manufacturers to submit revised financial bids by December 21.

However, there was near unanimity among senior officials of the Ministry that it was still too early to say which route the Government will adopt.

``There are still several Government procedures which will have to be cleared before the actual issue of release of funds is decided. On a conservative estimate, it could be anything from six months to several years before the actual deal is signed,'' the sources said.

Indian Airlines officials had earlier indicated to Business Line that the airline would only be in a position to send its final report to the Government on the aircraft of its choice by the end of January or early February next year.

Haj flights: Indian Airlines is to operate Haj charters as an independent carrier from Hyderabad and Srinagar to Jeddah from January 2002. This will be the first time that the airline will operate independent charters.

Earlier, IA used to operate only hub and spoke operations with Air India to transport hajis from India. Sources told Business Line that IA is to operate around 15 special flights from Srinagar and about 12 special flights from Hyderabad to Jeddah.

``IA will operate a minimum of 27 special flights from the two cities. However, the number of flights could increase in case the number of hajis to be carried goes up,'' sources said. The airline is to utilise its workhorse, the Airbus A-300, to carry out the Haj operations, which begin from January 15 and is likely to carry on till February 16.

However, officials were tight-lipped on how much funds the entire operation was likely to generate for IA. Last year, AI earned close to Rs 100 crore from the Haj operations.

For Haj 2002, the Government has decided to utilise the aircraft available within the country instead of leasing aircraft from the global market.

Official sources told Business Line that with AI curtailing services due to the global slowdown, it made more sense to ask the Maharaja to deploy its own aircraft for the Haj operations rather than go in for leasing of aircraft. The Government was also considering a proposal to allow AI to ferry passengers from international destinations close to Saudi Arabia as the aircraft would be returning empty after dropping hajis in Mecca. However, the proposal was dropped as it was considered unviable.

Last year, aircraft from Kumpuchean Airlines had been chartered by AI to ferry the Indian hajis, besides which, Saudi Arabian airlines transported close to 20,000 hajis.