CAG indicts Air India arm for wasting Rs 406 crore

Air India Charters Ltd, the low cost subsidiary of national carrier Air India, has been indicted by the CAG for wasting Rs 405.83 crore by renewing the lease of four aircrafts in its fleet even though the planes were not required as the airline went in for the acquisition of 18 new Boeing planes.

The airline did not even have enough pilots at the time to fly the planes and was operating on loss making routes but still decided to renew the dry lease of the four aircraft, the CAG report tabled in the Rajya Sabha on Friday states.

According to the report, acquisition of 18 new aircrafts was approved by the company and the Ministry of Civil Aviation in December, 2005 to replace the aircraft on dry lease. In fact it had been decided that in case Boeing was able to commence deliveries of the aircraft earlier, the number of aircraft would be reduced accordingly.

"Hence dry lease of four aircraft should have been terminated in tandem with the receipt of new aircraft on finance lease and certainly on expiry of the lease period in March-May 2011. This was also supported by the minutes of the company's board meeting which recognised (October, 2010) the economic issues against the renewal of dry lease and proposed for return of the aircraft," the CAG report observes.

It further states that the renewal of dry lease of four aircrafts till May, 2014 without factoring in shortage of crew, loss making routes and payload restrictions was against the rationale of acquisition of 18 new aircrafts and led to unfruitful expenditure of $76.39 million (Rs 405.83 crore) between March 2011 and May 2014 towards lease rentals contribution to maintenance reserves and re-delivery charges.