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IA to acquire 43 aircraft for Rs 101 bn

Indian Airlines on Wednesday approved a proposal to acquire 43 aircraft comprising Airbus A-319, A-320 and A-321 at a staggering cost of Rs 100.89 billion.

This was cleared by the IA board of directors after considering a report of the sub-committee set up by it to go into the matter, an official release said.

A report is being sent by the IA board to the civil aviation ministry seeking clearance of the proposal for purchase of the new aircraft.

The Board sub-committee had recommended acquisition of 43 Airbus with various sitting capacity ranging from 122 to 172 to meet the fleet requirements of the airlines from 2003/04 to 2007/08.

The sub-committee while accepting the report of the Aircraft Evaluation Committee recommended that the report may be sent to the civil aviation ministry with a request to send copies of and all the background papers to the office of Comptroller and Auditor General of India and the Central Vigilance Commission.

Reviewing the financial performance of the company for 2001-02 and approving the budget estimates for the coming financial year 2002-03, the airlines estimates that its net loss will come down to Rs 989 million during 2002-03 as compared to last year's estimated loss of Rs 251 million, which is marginally less than the original budget estimates of Rs 251million.

The release said the financial performance of the company during 2001-02 was affected by sharp increase in the prices of aviation turbine fuel and unprecedented rise in insurance premium.

The price of aviation turbine fuel had witnessed a massive increase of 48 per cent during the year 2000. It was expected that with dismantling of the Administered Pricing Mechanism of petroleum products from April first, 2001, IA could get domestic aviation turbine fuel at cheaper rates.

Despite dismantling of APM, the domestic aviation turbine fuel prices remained higher by nearly Rs 1,800 per kilolitre at Rs 17,000 per kilolitre compared to the price of Rs 15,200 per kilolitre prevailing in March 2001.

The insurance premium has gone up from Rs 590 million to Rs 1.85 billion, an increase of Rs 1.26 billion. The premium rates first increased after the terrorist attack on the Colombo airport and later in the aftermath of the September 11strikes in USA. There was also a sharp decline in air traffic from September 2001 onwards, the release said.

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