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Parliamentary panel asks govt to pay IA for causing losses

A parliamentary committee has asked the government to compensate Indian Airlines for the losses resulting from the various decisions taken by it in the recent years.

It has also cautioned the government against delays in phasing out ageing aircraft in its fleet, and deciding on their replacement.

The Standing Committee for Transport and Tourism, headed by Sunder Singh Bhandari, has reported that extraneous factors like government decisions had to a great extent accounted for the airline's huge losses. Of course, the airline's own shortcomings also resulted in Indian Airlines being in the red.

The committee report deals at length on the prolonged grounding of A-320 fleet (11 new generation aircraft bought in 1990) which had caused the largest single component of the losses. Indian Airlines never recovered from this loss, which solely resulted from a government decision.

In addition, the government had delayed sanctioning the revision of fares. The merger of loss making Vayudoot, the high cost of ATF (aviation turbine fuel) and operations on uneconomic routes were the other factors.

The committee suggested to the government that Indian Airlines should soon take a decision on the acquisition proposal for 50-seater aircraft.

The committee recommended that Indian Airlines should also start planning the phasing out of its ageing A-300 Airbus and Boeing 737 fleet, as these planes would be due for replacement in the next five years or so.

The committee was of the view that the decision to phase out these planes should not be left for the last minute and then drag on indefinitely, as had been the case with Air-India's fleet.

Expressing concern at the delay in the purchase of these aircraft, the committee said the delay in arriving at a decision had resulted in inadequate flight links to many areas of the country.

''It has been seen in the case of several remote areas that they are put on the air traffic map during the tourist season to cope with additional traffic, but these services are terminated in the non-tourist season as the airlines does not find enough traffic for its Boeing and Airbus aircraft," the committee noted, suggesting that a basic minimum air traffic link for these places even during the non-tourist season would be possible and economical if the airlines had smaller aircraft such as 50-seaters.

The committee also noted with concern that a number of private airlines who were required to fly on uneconomical routes were frequently not doing so under one pretext or the other, and the government had been lax in monitoring these violations.

Recalling that it had brought to the government's attention the case of one such airline not fulfilling its normal quota of flights to the Lakshadweep Islands, the committee expressed the view that the government should be stricter in monitoring the operations of the private airlines in category II and III routes.

The committee also felt that the government should impose stiff penalties on the erring private airlines in this regard.

With regard to Indian Airlines in this connection, the committee felt it was necessary that Indian Airlines should connect far-flung areas. Even if it was uneconomical, it could be encouraged from the point of view of national integration and development.

However, the government should bear the additional cost burden which Indian Airlines will have to bear to fly on these routes above the prescribed limits, the committee added.

The committee said that the losses suffered by Indian Airlines on account of these various government decisions and public policies had been substantial. These had eroded the networth of the company and had added to the debt burden on the airlines.

Since the government and the public had a stake in the survival, growth and development of Indian Airlines, the committee was of the view that the government needed to find a way to compensate the Indian Airlines for the losses incurred by it on account of specific decisions of the government either through writing off the losses or by converting the debt into equity.

It felt that if this was not done, it would hamper the augmentation, expansion, and modernisation of its fleet.