Why is the Government treating Boeing with kid gloves?

Even after chronic technical failures of Dreamliner aircraft and Air India’s reputation taking a beating, the government is yet to take the US-based aircraft manufacturer, Boeing to task.

In the last 3 weeks, a number of flights between Kolkata and Delhi were cancelled due to technical snags in the Dreamliner and such glitches are being reported very often in the airline’s international sectors as well.

Air India’s Engineering Union had urged the management last year to defer deliveries of the remaining aircraft. It also urged that the manpower for frequent unscheduled snags be compensated, including damages for hampering the airline’s on-time performance. But, the Ministry of Civil Aviation has still not initiated any action and is rather still taking delivery of the 5 remaining aircraft.

Meanwhile, according to officials, Boeing is in talks with Air India to revise the delivery schedule for the remaining aircraft. Boeing wants to deliver all of them by March 2018.

On the other hand, the Central Bureau of Investigation (CBI) is yet to conclude its investigation into this deal. 

The Comptroller and Auditor General (CAG) had in its report, submitted to Parliament in 2011, found fault with the then Aviation Minister, Praful Patel, for not supporting the airline, which has lurched from one crisis to another over the past few years and now finds itself in a debt trap.

The auditor, which covered the 2001-2010 period, in its review had said in its 121-page report that Air India was forced to buy aircraft from Boeing in a hurry. It also detailed events that led to the company’s ambitious $11 billion purchase on a paltry equity of $34 million.  

It said that in 2004, minister Patel, “In a meeting at Mumbai, impressed upon the need for Air India to examine the possibility of non-stop India-US operations” and review its fleet acquisition plan.

Thereafter, the ministry “communicated the above-mentioned decisions on August 5, 2004, to Air India and directed them to revisit the acquisition proposal and submit a fresh proposal which would include revised requirements in view of the “new dimension in the competition on the India-US route” and launch of a no-frills airline called Air India Express.

Interestingly, the same India-US route was the one on which Air India made the highest loss among all the routes it flew in 2005-06.

It lost Rs 552.44 crore in the India-US sector that year. By 2009-10, this had increased to Rs 1,522.15 crore.

Air India’s financial health deteriorated gradually.In 2002-03, Air India (the combined entity of Indian Airlines and Air India) lost just Rs 63 crore. This ballooned to almost Rs 7,000 crore in 2010-11 after a much-publicized merger in 2007 that was aimed at making the airline profitable by the third year.

“The above sequence of events clearly demonstrates that the erstwhile Air India was advised to revisit its proposal by the aviation ministry into expanding its requirement of aircraft. While their earlier proposal for 28 aircraft had taken two years to prepare and submit, the revised long-term fleet for the 50 aircraft plan was completed in four months”, the auditor said.

Patel had denied all the charges made by CAG then.Air India has, since the aircraft deal and a botched merger, slipped into a debt trap of more than $6 billion and is undergoing a nearly $3.5 billion government bailout.