The Telegraph
Since 1st March, 1999
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Green signal for IA fleet expansion

New Delhi, June 12: A high level meeting held here today decided to go ahead with Indian Airlines’ plans to buy 43 wide-bodied jets at a cost of nearly Rs 10,000 crore.

The inter-ministerial meeting attended by top civil aviation, PMO, finance and Planning Commission officials vetted the plan drawn up by IA to buy a new fleet which it hopes will help it replace ageing aircraft and expand to take on domestic and global rivals.

IA wants to buy a mix of Airbus-319s, Airbus-320s and Airbus-321s and they are to be delivered over four years between 2004 and 2008. While the airline had initially calculated it would cost them about Rs 10,089 crore, with the rupee strengthening against foreign currencies, the cost is likely to come down to a little over Rs 9,000 crore, IA officials estimate.

After today’s clearance, the plane purchase plan will now be placed before the public investment board and then before the Cabinet. Earlier, the civil aviation ministry had taken permission from the Cabinet to take IA and its sister airline, Air-India, off the list of companies to be disinvested in order to go ahead with the plane purchase and airline operation revamp plans.

Although the BJP-led government wants to drag its feet over the purchase as it feels any big buys just before the election could create problems for it, IA is keen that it is cleared early.

IA currently has a fleet of 56 aircraft, including six leased planes. While its fleet of A320s are relatively new with an average age of 12 years, some 20 planes — 11 B737-200s and nine A300s — are between 18-21 years. In contrast, Sahara and Jet, IA’s two rivals have recently inducted new planes bringing down their average fleet age to about seven to eight years.

The main reason for IA trying to renew its fleet is that new planes will mean a far lower operational cost. A large chunk of the airline’s cost goes into maintaining old aircraft. The older an aircraft gets, the more money an airline has to spend on it on engineering overhaul and modifications. Maintenance costs have been on the rise for the airline. While it was about 14 per cent of operating costs in 1997-98, it crossed 30 per cent in 2001.

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