Indian Airlines lets Airbus off Rs 788 crore hook


Member of The Month SEPTEMBER 2009
Senior Member
Jun 8, 2009
Indian Airlines lets Airbus off Rs 788 crore hook

The CBI is investigating how a clause requiring Airbus, a leading manufacturer of airliners, to invest $ 175 million in India was glossed over in an agreement it signed with Indian Airlines to sell it 43 aircraft in 2006.
Airbus was to invest that money (about Rs 788 crore) in creating training and repairs facilities in India, according to that clause as stated by the government in press statements issued then.
This was mandated by an Empowered Group of Ministers (EGOM), which monitored the purchase because of the sheer size of the deal, and it was endorsed by the Cabinet Committee on Economic Affairs, according to a statement issued by the civil aviation ministry in September 2005.
Indian Airlines was to buy 43 Airbus aircraft — 20 A319s, four A320s and 19 A321s — for $ 2 billion (Rs 9000 crore).
The delivery has already begun.
But the final agreement signed between the two sides “does not clearly mention the commitment of Airbus”, the CBI has said in a Preliminary Enquiry (PE) filed on January 14, No. DAI 1020-A-001.
“European Aeronautical Defence Systems and Airbus are working closely with Natio-nal Aviation Company of India Limited (name of the company formed by merging Indian Air-lines and Air India) to fulfill our obligation to create an MRO (Maintenance, Repair, Overhaul) in India,” an Airbus spokesperson told HT from France.
The PE has been filed against unnamed officials of the civil aviation ministry and Indian Airlines.
“There appears collusion between certain unscrupulous officials of Ministry of Civil Aviation as well as Indian Airlines, which has resulted in signing of a purchase agreem-ent in clear deviation from the decision of the EGOM,” the PE said.
“We have replied to the CBI and will provide them with whatever help they require,” said a senior civil aviation ministry official when asked for comments. He did not want to be identified.
The agency files PE as soon as it is convinced there is material evidence to investigate a case. This is turned into a Regular Case if the offence is found serious enough to be sent to court.
“A reliable information has been received that EGOM after internal deliberations made with representatives of M/s Airbus Industrie and it was decided that on purchase of 43 aircraft by M/s Indian Airlines, M/s Airbus Industrie, inter alia, would make an investment of $ 175 million,” the PE said.
“It was agreed by M/s Airbus Industrie that they would make an investment of $ 100 million to facilitate creation of, maintenance, repair and overhaul unit in India and another $ 75 million for setting-up a training centre. The minutes of the meeting of EGOM clearly reflecting the commitment of M/s Airbus regarding investment of $ 175 million was sent to Ministry of Civil Aviation.
“However, agreement signed between IA and Airbus for purchase of 43 aircrafts does not clearly mention the commitment of Airbus to invest US $ 175 million." Is there enough here to ground the deal, or merely cause some turbulence?


Senior Member
Feb 23, 2009
Thank you for bringing this to our attention. I believe another letter writing campaign is on the cards? A.V., please advise.

I'd be willing to help pen the letter if the majority of us were willing to participate in the undersigned.

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