Indian Airlines fleet expansion may drag on

Ashwini Phadnis

NEW DELHI, Nov. 28

THE announcement by the Civil Aviation Minister, Mr Syed Shahnawaz Hussain, that the Government would provide Rs 9,000 crore in phases to Indian Airlines has not enthused the aviation industry, which is going through a turbulent phase.

Aviation industry experts feel that while the promise of injection of funds may induce IA to firm up its fleet acquisition plan, it was quite unlikely that the project would take off in right earnest before March 2002 at the earliest.

The IA board is scheduled to meet in Delhi on December 5 to approve the fleet acquisition committee report. Even if the report is approved at that meeting, the paperwork relating to the decision may take a fortnight more.

``The report will then be passed on to the Ministry of Civil Aviation for its approval, which is likely to take four to five weeks for clearing the proposal. Once this happens, it will then have to be placed before the Cabinet for final approval. It is quite unlikely that the project will be cleared before March 2002 and even that is being highly optimistic,'' industry watchers said.

The internal report of the airlines on the type of aircraft best suited for IA was completed in April this year and submitted to the Chairman and Managing Director. However, in July this year, IA asked the two aircraft manufacturers — Airbus Industrie and the Boeing Company — for extension of the price offers made by them.The total cost of the project has been estimated at close to Rs 9,000 crore including the cost of aircraft, the expenditure on spares and inventories, simulator, ground support equipment and training.

IA had estimated that it would require around 15 to 17 aircraft of the 100-seat variety, seven to eight of the 150-seat variety and 15 to 16 of the over-150-seat variety.

Among the aircraft that have been shortlisted by IA are the Boeing 717, Boeing 737-600, Airbus A-318 and Airbus A-319 in the less than 100 to 125 seating capacity. For the over-150-seat category, the aircraft shortlisted include the Boeing 737-900 and Airbus A-321.

Sources said that the plan which IA has in mind for the different types of aircraft it is seeking to acquire factors in a first class configuration with eight seats in the business class for the aircraft having a seating capacity of up to 100 seats and 20 seats in business class for the other type of aircraft.But despite all the paper work being completed by the airline and the Government promising a package, there are apprehensions that the purchase may not go through immediately.

Sources said that with the global aircraft purchase and lease market softening, the Government could direct IA to call for a re-bid and reconsider the traffic and growth in the domestic market so as to assess the exact demand of the market. If, this were to happen, sources said, it was bound to further delay the fleet acquisition plans of IA.

Besides, there is the issue of delivery of aircraft taking at least a year from the date the order is placed. The two aircraft manufacturers agree on the time frame and also caution that the time frame could get extended further if the airline is looking for ``specific'' models of aircraft.

However, to meet the demand of aircraft in the interim, the aircraft manufacturers have suggested that IA look at the leasing route.

But there is near unison among almost all the players that global geopolitical considerations would play an important role in concluding the deal.

``India is an old friend of the European Union while it has again an established close ties with the United States.

With the two major aircraft manufacturers -- Airbus and Boeing -- coming from one grouping each it will be an extremely difficult decision and surely not one that would be made in a hurry,'' sources said.