Three FIRs by CBI and how Air India went in the red

Lalit Shastri

The Central Bureau of Investigation on Monday, 29 May 2017, registered three cases (FIRs) and one Preliminary Enquiry against Air India, “unknown” officials of Union Ministry of Civil Aviation and others on orders of Supreme Court of India in response to an SLP by Centre for Public Interest Litigation.

This SLP (Civil) [No. 25545 of 2012] had extensively quoted and enclosed the observations of the CAG, Report of Parliamentary Committee on Transport Tourism and Culture dated 21 January 2010 and the Report of Parliamentary Committee on Public Undertakings dated 12 March 2010 in respect of the issues mentioned in the FIR/PE registration report.

Praful Patel (a 2004 photo)

The moment he became the Civil Aviation Minister in 2004, Praful Patel spearheaded the decision to merge the the two airlines – Air India and Indian Airlines – and gave a huge order to purchase aircraft – both to Boeing as well as Airbus.

Of the eight Boeing 777-200LR acquired by Air India after Patel took over, five of these grossly under-utilised aircraft were sold to Etihad Airways in December 2013 as a part of the “financial restructuring” exercise.

The merger of the two Public sector airlines has been criticised continuously by those in knowledgeable cirlces as one profit making airline was merged with a loss making airline. The propelling idea behind this decision was that there would be a common infrastructure. In the end, neither the personnel policies, nor the engineering policies or the routes matrix gelled and nothing worked.

Air india went down due to the ill fated decision of the merger of two organizations that were not destined to be, coupled with many other wrong decisions of the earlier regime. Ofcourse gross mismanagement at the senior management levels of the company played its part in the rapid downward slide too, but isn’t appointing senior management functionaries the function of the governments? – Ashwani Lohani, CMD, Air India

There have been a spate of articles on air india recently. While the grim financial scenario cannot be denied or wished…

Posted by Ashwani Lohani on Saturday, May 13, 2017

Patel, in his capacity as Civil Aviation Minister, was sitting at the apex of the decision-making process when Air India became a customer of Boeing 787 Dreamliner and it came into service with lots of glitches. Of course, there were also guarantees , for example, if you don’t fly it for a certain number of hours we are supposed to compensate you. But whether or not the guarantee was used is a million dollars question.

On 11 January 2006, Air India announced an order for 68 jets – 8 Boeing 777-200LR, 15 Boeing 777-300ER, 18 Boeing 737-800 and 27 Boeing 787-8 Dreamliners. After the merger in 2007, Air India inducted the biggest member of the A320 family, the A321, to operate mainly on international short haul and medium haul routes. Simultaneously, Air India also leased the Airbus A330s to operate on medium-long haul international routes (ref: wikipedia).

Significantly, Boeing had offered the next generation of 787 but that was politely turned down on the plea that the Government of India procedures would take another about 4 years and the straight message to the aircraft company was that it should just supply what has already been ordered. In this context, it would be pertinent to note that Air India Board did not have the authority to take decisions, whereas a private player could promptly decide and place an order.

As a consequence of gross mismanagement and spate of irregularities, there is now a burden of about Rs. 50,000 crore on Air India. Unless the government writes this off, it will be very difficult to bail out the national carrier.

There is another big question: When the loss making Indian Airlines could be merged with Air India, why Kingfisher, an airline with 100 aircrafts that was flying both on domestic and important international routes, was allowed to collapse? This airline was going bad mainly because of Aviation Turbine Fuel (ATF) prices and global recession. The government could have taken over Kingfisher, removed Vijay Mallya as chairman and merged it with Air India – given the fact that so many jobs and what not was involved. Air India was having only about half of the total fleet of aircraft that was at Kingfisher’s disposal.

While the previous UPA Government allowed Kingfisher to collapse, it went whole hog to save Jet Airways by closing down Air India’s lucrative international routes to favour Jet Airways. Even the time slot on the domestic sectors were allegedly approved to favour private carriers. According to insiders, all this was done at the behest of Praful Patel, known in political circles as the “Maharaja of Gondia”.

Praful Patel got Arvind Jadhav- a 1978 batch IAS officer, as CMD Air India in 2009. He was known to be a blue-eyed boy of RV Deshpande, Minister for Large and Medium Industries of Karnataka. Deshpande and Patel are related.

Air India Express a fallout of Vayudoot is another story…This airline is about to wind up as they are sending back their aircrafts which are on lease. All the pilots in this airline, who were on contract, have been absobed in Air India and are now flying the 787s.

CBI registers three FIRs against Air India and others

The first case has been registered under Section 120-B read with 420 of Indian Penal Code and Section 13(2) read with 13(1)(d) of Prevention of Corruption Act, 1988 against Air India, “unknown” officials of Union Ministry of Civil Aviation and others to investigate the allegations relating to purchase of 111 aircraft for national airlines costing about Rs. 70,000 crore to benefit foreign aircraft manufactures. Such a purchase caused an alleged financial loss to the already stressed national carriers.

The second case has been registered under Section 120-B read with 420 of PC and Section 13(2) read with 13(1)(d) of PC Act, 1988 against “unknown” officials of Ministry of Civil Aviation, NACIL, Air India and private companies and unknown others to investigate the allegations of leasing of large number of aircraft without due consideration, proper route study and marketing or price strategy. It was also alleged that the aircraft were leased even while aircraft acquisition programme was going on.

The third case has been registered under Section 120-B read with 420 of IPC and Section 13(2) read with 13(1)(d) of PC Act, 1988 against “unknown” officials of Ministry of Civil Aviation, National Aviation Company of India Ltd. (NACIL) – the entity formed by the merger of Air India and Indian, Air India and other unknown private persons and companies to investigate the allegations for giving up profit making routes and profit making timings of Air India in favour of national and international private airlines causing a huge loss to the national carrier.

A Preliminary Enquiry has also been registered against unknown officials of Ministry of Civil Aviation and unknown others to enquire into the allegations relating to the issue of merger of the two national carriers -Air India and Indian Airlines – causing loss to the national exchequer.

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