It has termed the merger as ‘ill-timed and not in accordance with the need of the airlines’.
The report also found faults in the Ministry’s decision to acquire 111 planes for Air India through debt. It said that the aircraft acquisition has contributed to the airlines massive debt liability.
The Comptroller and Auditor General, has called for immediate government intervention and a bailout package to fulfill the requirements of Air India . In its report tabled in Parliament on Thursday, CAG said that intervention can be in the form of equity infusion, outright grant and soft loans as per the requirements of the airline.
The report further said that the funding of the purchase was a recipe for disaster and the aviation ministry, the PIB, and the Planning Commission should have sounded the alarm.
The report, however, does not name individuals or quotes the losses incurred due to this buying decision.
“The delivery of AIL/IAL’s new fleet acquisitions, approved by GoI in December 2005, was scheduled only between 2006 and 2011, giving a reasonable timeframe of 2 to 3 years post-aircraft delivery for stabilisation of the expanded ‘footprint’ could have provided AIL/IAL a ‘level playing field’ for competition. Substantially enhanced fleet acquisition, in fact, justified AIL to operate larger number of routes,” said the CAG report.
The Auditor general has recommended a total hands-off approach by the government with regard to the management of the national carrier. It has recommended professional management of the airlines and asked the government to provide it with a level playing field.
It also advocates for autonomy in commercial and operational decision making of the airline and said that decisions relating to allotment of routes and flight timings should be made in the interest of the airline
Union Minister Mr.Praful Patel who was earlier holding the charge of Civil Aviation Ministry has dismissed the charge that CAG has indicted anybody in its report tabled in the Lok Sabha on Thursday. He told reporters that the decision to purchase airbuses was part of a larger decision making process in the airline itself.
BJP Spokesperson Rajiv Pratap Rudy said, “The CAG report of Civil Aviation raises the same questions which BJP has been asking. The purchase of aircraft was supply driven, it is a matter of deep investigation. It seems Air India is unfolding another major scam in the UPA Government.”