Wednesday, February 28, 2024

CAG slams Civil Aviation Ministry

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New Delhi: The CAG has come down hard on the Civil Aviation Ministry over the decision to acquire 111 planes for Air India through debt, calling it “a recipe for disaster” and also on the merger of the two erstwhile state- run carriers.

The merger of Air India and Indian Airlines was described as “ill-timed” by Comptroller and Auditor General(CAG) which said this exercise was undertaken “strangely from the top (rather than by the perceived needs of both these airlines), with inadequate validation of the financial benefits”. Terming the move for acquiring a “large number” of planes as “risky”, the CAG said the aircraft acquisition had “contributed predominantly” to the airline’s massive debt liability of Rs 38,423 crore as on March 31 last year.

In its latest report tabled in Parliament on Thursday, the Government Auditor said, “The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs 325 crore for Indian Airlines. “This was a recipe for disaster ab initio and should have raised alarm signals in Ministry of Civil Aviation, Public Investment Board and the Planning Commission”, the report said.

The CAG felt there is a need for some “harsh decisions” to improve the health of the airline.

The CAG also took the Civil Aviation Ministry to task for liberalising the bilateral air traffic entitlements with other countries in a manner which “did not provide a level playing field to AI (and to a lesser extent other Indian private airlines)”.

The report dealt with several aspects of the ailing national carrier’s losses, fleet acquisition, merger, huge debt burden, delay in joining the global airline grouping Star Alliance and its financial and operational performance.

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