The Hindu Business Line : Maharaja's choice

BUYING NEW AIRCRAFT could not have been so difficult. For more than ten years now, the country's international carrier, Air India, has been looking to acquire aircraft from the United States-based Boeing Company and Europe's Airbus Industrie. Some 18 months ago, its board of directors did arrive at a decision, and chose to split the order between the two suppliers, picking a combination of the long-distance Airbus 340-300 and the short-haul Boeing 737-800. The National Democratic Alliance Government of the day could not see the order through as the general elections came along. That lapse was fortuitous for the choice was one made by an airline that was unsure of its footing in the marketplace. The Airbus model was just not right for the airline to mount non-stop services between India and the US, a route that serves two million passengers each year and promises more. The Boeing 737-800 too had fewer seats than the traffic on Air India's short-haul routes would have warranted. It was almost as if the airline board had discounted its own abilities to draw passengers.

The decision this time round to buy larger and longer-flying aircraft reflects a more confident airline, a more supportive Civil Aviation Ministry and a belated realisation that without the right equipment it would be curtains for the carrier in a play turning more competitive than ever before. It was bad enough losing market share to foreign carriers over the years. In the straitjacket, bilateral arrangements that governed the distribution of passenger flights between two countries, Air India ought to have retained half of India's international passenger traffic. In reality, it holds barely a fifth, having ceded customers to the more enterprising European and South-East Asian airlines. Now, with the skies cleared for private Indian carriers to launch flights overseas, Air India is in danger of losing even that tenuous grip. In the years of indecision, Air India was forced to lease aircraft; an option not only costlier but also not providing it the right quality or quantity of aircraft needed to match the competition.

But has the tide finally turned? It is still too early to say. Not enough evidence has been revealed of the competing bids for an impartial assessment of Air India's decision. Also, the deal has still to be approved by the Public Investment Board and then the Union Cabinet before the airline can place the $6-billion order — a hazy and mine-ridden process that is hardly suitable for today's fast-track business. Experience suggests that there could be a lot more left in the game. International government lobbying has always leaned on the process, and European interests may not let go so easily of the order that the US Government lobbied so hard and so openly to win for Boeing. Then there are other issues that can creep in; for instance, the Government could ask the aircraft manufacturer to buy some components from public sector units such as Hindustan Aeronautics. These can still throw the spanner in the works, and delay the acquisition process. While managements of the private airlines move swiftly to consummate their purchase decisions, will the employees of the Maharaja airline need to wait longer for the make-over?

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