Financial Daily from THE HINDU group of publications
Monday, Feb 27, 2006


News
Features
Stocks
Shipping
Archives
Google

Group Sites

Logistics - Airlines


IA purchase pact: Need to streamline systems

Ashwini Phadnis

Four years, three Ministers of civil aviation and a market share that dipped from 39.8 per cent in 2003 to 31 per cent in 2005 is how long it took Indian Airlines (IA) to sign the purchase agreement for 43 Airbus A-320 aircraft. The pact was signed finally on February 20. The airline plans to induct the aircraft from this October and complete the process by 2010.

Ironically, the IA purchase pact was signed when several airlines from India, including some that have taken to the skies in the last few years, were announcing huge orders for aircraft and engines. These include at least two that took off just last year — SpiceJet and Kingfisher Airlines. While the low-cost airline, SpiceJet, announced purchase of 10 Boeing 737s, including five 737-900 Extended Range and five 737-800 aircraft, Kingfisher ordered for 15 ATR 72-500 aircraft.

Then, GoAir, which took to the skies earlier this year, announced its decision to acquire 20 Airbus A-320s, just as the to-be-launched low-cost outfit, Jagson Airline, decided to buy 20 Airbus A-321s.

Costly delay

But Indian Airlines, which started operations on August 1, 1953, could not make up its mind quickly. This raises the question as to why systems are not in place for the airline to put through vital transactions quickly, especially in a marketplace that is getting fiercely competitive.

The Government took several steps to ensure transparency before it gave the final nod for the IA purchase deal. This included a final round of price negotiations between an Empowered Group of Ministers (e-GoM), headed by the Finance Minister, Mr P. Chidambaram, and Airbus Industrie. But in an environment where even a day wasted is an opportunity lost, the need for having a system that allows a state-owned enterprise to function autonomously, yet be answerable to the people, is essential.

Happily, Indian Airlines was not idle for four years while the deal was being firmed up. It decided to look at leasing aircraft to meet the growing market demand. But, given the public sector nature of the airline, even this was not easy. Therefore, if the Government is serious about the future of the airline, it must ensure that the latter has the flexibility to take decisions promptly.

More Stories on : Airlines | PSU

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Udaipur airport to be upgraded


Air Deccan, Paramount opt for parking at non-metros
AI fails to meet IATA's safety audit norms
IA purchase pact: Need to streamline systems
Delhi airport new name registered
Cochin Port ready to handle deep draft vessels
New Mangalore Port — Seeking `deeper' prospects
Concor eyes Paradip, Dhamra ports
But will there be enough boxes?

NMP handles record coal
No favourable winds for HSL revival
Move to reduce freight rates hailed
Gati opens distribution centre in Coimbatore
Secunderabad-Chennai Express



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line