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New Delhi (Reuters): India’s Civil Aviation Ministry will cooperate with a federal investigation into alleged irregularities in the purchase of 111 aircraft by State-run carrier Air India and into its merger with Indian Airlines, the Civil Aviation Minister said last week.
The Central Bureau of Investigation (CBI) said on Monday it had registered three cases against Air India and launched a preliminary investigation into “unknown” officials at the civil aviation ministry.
All the cases relate to decisions and deals made under the previous Congress party government, which lost power in 2014.
Air India purchased 111 aircraft for about 700 billion rupees ($10.8 billion) a decade ago, and the CBI said the deal was damaging, benefiting foreign planemakers while landing Air India with losses.
The CBI is also investigating Air India’s decision to lease a large number of aircraft which it said was “without due consideration, proper route study and marketing or price strategy.”
The third case relates to why profit-making routes flown by Air India were axed, a move the agency said helped rival private airlines while causing “a huge loss to the national carrier”.
The agency has also launched a preliminary case against “unknown” officials at the ministry of civil aviation into allegations relating to the merger of India’s two national carriers - Air India and Indian Airlines - that it said deprived the national exchequer of funds when the financially stretched airline was bailed out later.
“Whatever knowledge we have, we will cooperate with them,” Civil Aviation Minister Ashok Gajapathi Raju told reporters in New Delhi, referring to the CBI.
The CBI initiated its probe on the orders of India’s top court in January, and it said further investigations were continuing.
Loss-making Air India has seen much of its market share disappear to fast-growing private local carriers and international airlines in the last decade.
Raju said all options were open when asked about comments this month from India’s finance minister Arun Jaitley, who said the government should consider privatising Air India.
A Civil Aviation Ministry official said a decision on the future of Air India is likely to be made within the next three months.
New Delhi (Reuters): Privatising State-owned airline Air India will be “very difficult” unless the Government writes off at least part of its debts, a senior government economic adviser said on Friday after a top policy panel recommended selling off the carrier.
Loss-making Air India, bailed out in 2012 with $5.8 billion of federal funding, has troubled the government since a botched merger between two State carriers in 2007 and the rise of private airlines slashed its market share.
Niti Aayog, the Government’s top policy think-tank headed by Prime Minister Narendra Modi, recently submitted a report recommending a stake sale in the airline, a move Finance Minister Arun Jaitley welcomed.
Arvind Panagariya, deputy head of the think-tank, said the Government needed to decide whether it would write off all or part of Air India’s 520 billion rupees ($8 billion) in debts.
“Selling it with the current existing debt is going to be very, very difficult even if the sale is open to both domestic and foreign buyers. So, something will need to be done on the debt issue,” he told reporters in New Delhi.
Officials say it is up to the Civil Aviation Ministry to decide whether to push for a sale. The aviation minister has said that the airline should not depend indefinitely on taxpayer funding.
Previous attempts at selling off India’s State-owned airline have floundered, due to political and union opposition and a lack of potential buyers.
Air India’s market share in the booming domestic market crumbled to 13% from 18% in 2014 as more nimble private carriers like IndiGo, owned by InterGlobe Aviation, SpiceJet and Jet Airways expanded.
The airline is still a large player on international routes, however, and its popular landing slots could make it an attractive proposition without the debt.
India’s Central Bureau of Investigation (CBI) on Monday said it had registered three cases against Air India relating to alleged irregularities in the purchase of 111 aircraft and into its merger with Indian Airlines a decade ago.
All of the cases relate to decisions made under the previous Congress party government, which lost power in 2014.
Air India’s operational performance has improved in recent years, although its debts, high cost base and reputation for poor punctuality continue to weigh on its recovery.
