Purchase Of Aircraft May Spell Doom For A-I, I-A; Lease Option Favoured

New Delhi, December 22: | Updated: Dec 23 2002, 05:30am hrs
With Air-India and Indian Airlines planning to buy aircraft and their acquisition plans awaiting the Cabinet Committee on Security nod, concerns are being expressed that the purchase option could spell doom in the long run for the carriers which could find it difficult to pay off the huge debts. Sources in aviation industry and a section of officials feel the two carriers could go in for the lease option as it was not only far less risky, but also did not lock the carriers into huge debts that they may not be able to service.

The type of fleet to be acquired by both the carriers could also complicate the disinvestment process as the aircraft type may not be compatible with that of the potential strategic partner, they said.

However, members of the Parliamentary consultative committee on civil aviation have favoured the purchase option than leasing. Their concerns were voiced at a meeting here two days ago.

The sources claimed that several once-profitable airlines had got into cash flow problems, with some of them even turning insolvent, due to the commitments on fleet purchase.

They quoted the examples of Lufthansa, Japan Airlines and British Airways, which reported huge losses in the early 1990s due to commitments to the Boeing 747-400.

PTI