Rs 10,000 crore loss Unnecessary Purchases by Govt brought Air India into financial mess – CAG report finding

Rs 10,000 crore loss Unnecessary Purchases by Govt brought
Air India into financial mess – CAG report finding

The Comptroller and Auditor General of India (CAG) said that
Air India incurred Rs 10,000 crore losses because it was forced into buying 111 aircraft it did not need.


In 2007 Air India and Indian Airlines got merged.

CAG report said and indicts that indicts the Civil Aviation Ministry for forcing the multi billion dollar aircraft acquisition. The loss from the forced aircraft acquisition resulted into a loss of Rs 10,000 crore.

According to the CAG report the proposal to buy 43 aircraft for Indian Airlines in 2005 was done without adequate due diligence regarding the economic viability.

The induction plan was based on a study done in the 90's and hence not up-to-date, but the Civil aviation Ministry went ahead the ministry despite warnings by the Planning Commission and its own financial advisor.

Manufacturer Airbus was to invest $100 million after the deal for maintenance and repair, but the fact was missing in the final agreement.

Air India proposed to buy 28 aircraft, but Civil Aviation Ministry increased the number to 68 despite the national career's opposition.

The CAG report says the decision was earlier for a mix of aircraft, Airbus and Boeing, which was later converted to an all Boeing fleet

The deal was done despite government evaluating agencies saying that this push Air India into a deeper financial mess.

All such faulty decisions led to a loss of 10,000 crore and the current situation that the airline is now in.

Thus again this shows that we need to bring accountability on politicians and ministers.


Reality views by sm-
Thursday, May 05, 2011

Keyword Tag - Air India Loss CAG Report