Air India’s distress sale of 5 new Boeings under CAG lens

17 Mar 2015


The Comptroller and Auditor General (CAG) of India is reported to have initiated an audit query into Air India's distress sale of five new Boeing 777s, at a throwaway price, even as the government on Monday denied any irregularities in the mega aircraft purchase order by Air India.

A Mail Today report has now quoted a senior CAG official as saying that the CAG Mumbai office had sent the query on the distress sale of the five aircraft to the AI management at its headquarters in Mumbai.

The CAG has also alerted the aviation ministry on the issue as it exercises administrative control over the national carrier, he added.

The distress sale of the five Boeings to Abu Dhabi-based Etihad Airways was made at one-third of the listed price, according to reports published last April by Mail Today.

According to its reports first published on 19 April and 30 April 2014, the Boeings, which were purchased at a staggering Rs1,300 crore apiece, were expected to serve AI for 25 years.

The airline had ordered 111 aircraft in 2005-06, during the period of the first term of the UPA government and the order has been the subject of much criticism by opposition parties.

That single order has been blamed for the subsequent decline of the national airline into deep losses.

Former CAG Vinod Rai's book, Not Just an Accountant: The Diary of the Nations Conscience Keeper published last September, had also stated that an enquiry into the issue was needed.

"If the above statements (in Mail Today) are true, why did we make the purchases and within five years of the delivery of the aircraft, sell them at roughly Rs427 crore each to Etihad Airways after having purchased them in 2005 for Rs1,300 per aircraft? How did our assessment go so horribly wrong? Have we held those responsible accountable? Indeed, will we ever be able to so? When will we learn from our mistakes?" Rai had said at that time.

The Modi government, however, denied any irregularity in the huge order even though the CAG report in 2011-12 had alleged several irregularities in the order.

The order is also under probe by the CBI.

"These Boeing 777 aircraft should not have been bought in the first place. Air India did not require them and it was a case of over-ordering," the report cited former AI executive director Jeetendra Bhargava as saying.

AI had then stated that the long-range Boeing 777s were not fuel efficient and that it was losing money on its overseas flights. However, other airlines, including Etihad, continue to operate these planes.

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