A meeting of officials of the ministries of civil aviation and finance on Friday deferred a decision on Indian Airlines' fleet acquisition till the third week of next month, official sources said on Friday.
At the pre-Public Investment Board meeting, officials of Indian Airlines made a presentation seeking to justify its board decision to acquire 43 Airbus aircraft of different types at a cost of Rs 10,089 crore (Rs 100.89 billion).
The Planning Commission officials could not attend Friday's meeting and another round would be held in the third week of May, the sources said.
Any public sector unit, which decides to make a large investment, has to get its decision vetted by the PIB. Investments are made and orders placed only after PIB clearance is granted.
The pre-PIB meeting comes in the backdrop of IA and Air-India being taken off the divestment roster by the Cabinet Committee on Divestment on April 15, paving the way for them to go ahead with modernising their fleet.
In October 2001, the finance ministry had asked civil aviation ministry to formulate a specific proposal for aircraft acquisition and seek approval of PIB. Accordingly, IA was asked to prepare a project in this regard and it recommended purchase of 43 planes.
The draft PIB memorandum regarding IA's fleet acquisition was then circulated to various appraising agencies, but the finance ministry did not concur with the proposal insisting that IA be first taken off the divestment roster.
The Planning Commission had also opined that the decision on IA divestment should first be reversed by the CCD before a decision could be taken to make huge investment.
On the IA's fleet expansion plans, the sources said the Vijay Kelkar Committee, which had studied the domestic carrier in mid-1990s, had underscored the need for acquisition of modern aircraft and infusion of additional funds.
Following these recommendations, the Cabinet had in 1999 decided to infuse Rs 325 crore (Rs 3.25 billion) as equity in IA towards margin money for aircraft acquisition.
However, these funds were not released due to the Cabinet decision to divest the stake in the carrier, which has now been reversed.
Most of IA aircraft are about two decades old. The last decision to acquire planes were taken in 1986 and 1989 and aircraft were inducted between 1989 and 1994.
Besides 30 A-320s inducted in this period, IA's ageing fleet comprises five A-300s (over 20 years old) and 11 Boeing-737s (21 years), which were transferred to its subsidiary Alliance Air on lease.
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