PAC asks government for details of Boeing purchase

 Finding fault with the way the government had proceeded with the purchase of 68 aircraft from Boeing without anticipating Air India's payment capacity, a parliamentary panel has asked the Centre to provide details about the investments made by the aircraft manufacturer and the discount it gave.

The government had decided to increase the number of Boeing aircraft to be bought for AI from 28 to 68 in 2005 for about Rs 38,149 crore. The panel has said a “desperate need” for aircraft was made out, and “flawed assumptions” led to the revised project report for 50 long-range aircraft and 18 small aircraft.

In its report—Performance of Civil Aviation in India—tabled in Parliament on Thursday, the Public Accounts Committee (PAC) said the Empowered Group of Ministers (EGoM) cleared the proposal without having a long-term perspective and despite reservations and concerns raised regarding the number of aircraft to be procured. “This is unfortunate, to say the least,” it said. The panel, headed by senior BJP leader Murli Manohar Joshi, noted that the chronology of events leading to change in aircraft requirement started with a letter dated October 22, 2003, to the Prime Minister’s Office signed by 43 members of the US Congress pressing for purchase of aircraft from Boeing.

Referring to the 9/11 attacks, the letter said the US airline industry was struggling and the country was experiencing “highest levels” of unemployment in a decade. A successful contract with Air India would ease out “our unemployment concerns”, it said.

The PMO also received two letters from Boeing in which it indicated that the economics of the acquisition project were strongly dependent on the number of aircraft chosen, and that the technical evaluation could be easily influenced with the change in assumptions on number of aircraft to be purchased.

The panel found that Air India Board had cleared the deal for 50 long-range aircraft, out of which 35 were firm orders and the rest optional, and 18 short-range aircraft. However, when the transaction was finalised in December 2005, the government approved the acquisition of 68 aircraft as firm order.

This happened despite the Planning Commission saying that the assumptions “made by Air India Ltd regarding traffic projections were risky, and the upgradation appeared to be very ambitious”.

“The second reason advanced is that the EGoM chose to place firm order of 50 aircraft on account of the discounts made available by Boeing, as also the other investments to be made by the company in India. The committee refrains from commenting on the wisdom of the EGoM, but would like to be apprised of the discounts on such bulk purchase orders and the investments made by Boeing in India, as assured,” said the PAC report.
DH News Service