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CAG criticises Govt for downfall of Air India

Sep 08, 2011 09:28 PM IST India India

New Delhi: The Comptroller and Auditor General (CAG) report on Air India has come down heavily on the Civil Aviation Ministry while terming the acquisition of aircraft by the airline as "risky" and a "huge waste". The report, tabled in Parliament on Thursday, also called the merger of Air India and Indian Airlines as "ill-timed".

Former Civil Aviation minister Praful Patel was in trouble after the CAG report blamed the Civil Aviation Ministry for several decisions that led to downfall of the Maharaja.

It has termed the Rs 40,000 crore bulk order for 93 aircraft flawed and based on market share growth estimates that were not validated.

The report has also critiscised the Civil Aviation Ministry for influencing the bulk aircraft acquisition.

The report further said that the funding of the purchase was a recipe for disaster and the aviation ministry, the PIB, and the Planning Commission should have sounded the alarm.

The report, however, does not name individuals or quotes the losses incurred due to this buying decision.

"The decisions were not taken only by me, it was taken by the whole Government," said former Civil Aviation minister Praful Patel.

The merger of Air India with Indian Airlines has been termed ill-timed, undertaken after the two airlines ordered separate aircraft and the report squarely blames the civil aviation ministry for this.

The report said, "The merger was driven from the top (rather than by the perceived needs of both the airlines), with inadequate validation of the financial benefits from such a merger and without adequate consideration of the difficulties involved in the integration..."

BJP Spokesperson Rajiv Pratap Rudy said, "The CAG report of Civil Aviation raises the same questions which BJP has been asking. The purchase of aircraft was supply driven, it is a matter of deep investigation. It seems Air India is unfolding another major scam in the UPA Government."

Did the Government favour foreign airlines then? The CAG report has also questioned the timing of the bilateral agreements with foreign airlines. Airlines from Dubai were allowed to operate an additional 36,000 seats into India when the Indian carriers were clearly not ready for competition...

"The delivery of AIL/IAL's new fleet acquisitions, approved by GoI in December 2005, was scheduled only between 2006 and 2011, giving a reasonable timeframe of 2 to 3 years post-aircraft delivery for stabilisation of the expanded 'footprint' could have provided AIL/IAL a 'level playing field' for competition. Substantially enhanced fleet acquisition, in fact, justified AIL to operate larger number of routes," said the CAG report.