CBI to probe AI-IA merger, other UPA-era deals

New Delhi, May 29

The CBI will probe the controversial merger of Air India and Indian Airlines, besides alleged irregularities in purchase and lease of aircraft by the two state-run carriers under the UPA government which caused "huge" losses to the exchequer.

The investigative agency today registered three FIRs and a preliminary enquiry (PE) to go into the controversial decisions made by the erstwhile Manmohan Singh government with regard to the two national carriers, including surrender of profitable routes to favour private airlines.

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The cases have been registered against unidentified officials of Air India, Ministry of Civil Aviation and others under charges of criminal conspiracy, cheating and corruption, CBI spokesperson R K Gaur said.

"The cases relate to decisions taken by the ministry during the tenure of the UPA which caused losses of tens of thousands of crore of rupees to the exchequer," he said.

“The allegations relate to purchase of 111 aircraft for national airlines costing about Rs 70,000 crore to benefit foreign aircraft manufacturers. Such a purchase caused an alleged financial loss to the already stressed national carriers," Gaur said about the first FIR.

The CAG had in 2011 questioned the rationale behind the government's decision to order 111 airplanes for AI and Indian Airlines -- 48 from Airbus and 68 from Boeing -- for about Rs 70,000 crore in 2006.

Calling the decision a "recipe for disaster", the government auditor had said it should have raised "alarm" in the Ministry of Civil Aviation, Public Investment Board and The Planning Commission.

The second case pertains to leasing of a large number of aircraft without due consideration, proper route study and marketing or price strategy, he said.

"It was also alleged that the aircraft were leased even while aircraft acquisition programme was going on," he said.

The third case involves allegations of surrender of profitable routes and timings of Air India to favour national and international private players which allegedly caused a "huge" loss to the state-run carrier.

In its report on the merger of Air India and Indian Airlines, the CAG had called it "ill-timed". Now the CBI will go into various aspects of the merger.

The government auditor had said, "The financial case for the merger was not adequately validated prior to the merger." The merger proposal had received the Manmohan Singh cabinet's approval on March 1, 2007.

The CBI's action follows the Supreme Court's January 5 direction on a petition filed by the Centre for Public Interest Litigation led by lawyer Prashant Bhushan.

CBI sources said "all stakeholders" were under its scanner with regard to the merger of the two state-run airlines.

The process for the merger was initiated by the then Civil Aviation Minister Praful Patel of NCP on March 16, 2006.

Patel had sought a concept paper on the merger and a presentation was made before the prime minister on March 22 that year. A Group of Ministers (GoM) had later examined the proposal. Indian Airlines officially merged with Air India in April 2007.

The current Air India chairman-cum-managing director Ashwani Lohani had recently said the merger was behind Air India's "downfall".

Finance Minister Arun Jaitley had on Saturday favoured disinvestment of Air India, saying the airline's market share was just around 14 per cent whereas its debt burden stood at a staggering Rs 50,000 crore. — PTI