CBI blames blatant irregularities for Air India’s downfall

Three FIRs filed by the Central Bureau of Investigation (CBI) in the 'Air India scam' that happened during the UPA regime, allege that blatant irregularities were the reason behind the hastened downfall of the national airlines.


As per the FIRs, the civil aviation ministry had decided to purchase 111 aircraft for Air India costing about 70,000 crore when the airline was reporting a profit of about 100 crore, which meant that it was financially incapable of buying even a few aircraft.

This particular decision sank the airline into huge losses, which kept piling on year by year and reached tens of thousands of crores.

The FIRs also mentioned an internal Air India report of 2000-01, as per which the airline should have only taken aircraft on lease and not purchased any. This view was overruled by the aviation ministry, resulting in losses.

It was in 2004-05 that it was decided that Air India will buy 68 aircraft instead of the original plan of buying 28. Due to this decision, the expenditure quadrupled from the initial estimate of 10,000 crore to 44,000 crore.

The government also decided to buy 43 planes for Indian Airlines, at an additional cost of 8,399 crore.

"Concerns regarding potential difficulties of Indian Airlines in successfully funding the acquisition process with a positive net present value was raised within civil aviation ministry, but were ignored," said the FIR accessed by TOI.

The CBI added that even though the acquisition programme had been under consideration since 1996, it suddenly picked up speed in 2004.

"Between August 2004 and December 2005, the proposals were formulated by Air India, approved by its board, examined and approved by ministry, Planning Commission, department of expenditure, group of ministers and the cabinet," the FIR said.

Air India also signed the contract with Boeing to buy 68 aircraft on the same day of December 30, 2005, when the government cleared the purchase order.

National Aviation Company of India Ltd, which was incorporated to merge Indian Airlines and Air India, had an equity base of only 145 crore, and even then it commited to pay 44,000 crore for procuring 111 new aircraft.

The FIR added that for this purchase, loans were taken from both US and Indian banks, further pushing the airline into holes of debts and huge losses.

(Image source JK Newspoint)