Editorial – July 15, 2017

The CBI has so far registered 3 FIRs and one PE in the AI-IA purchase of 111 aircrafts, leasing of aircrafts even after completion of purchases, surrender of prime routes, the airline timings and merger of its domestic and international arms. The developments follow the apex court order on a PIL filed by CPIL, led by its lawyer Prashant Bhushan. The CAG and two Parliamentary Committee reports, on which the PIL relied heavily, and which have been framed as issues in the FIRs/PE had described the AI-IA practices as ‘disastrous’ and ‘alarming.’ All these developments took place when Praful Patel was the minister of civil aviation. And all these developments resulted in completely knocking down AI and enriching private airline carriers, most notably Indigo and big international suppliers as also netting enormous financial losses for the government. This is reiterated in the PIL and CBI’s FIR.

The CBI is investigating conspiratorial buying, leasing and business decisions of officials. But to answer the archetypal investigation question ‘Who dunnit’, it must probe the Indigo-Patel connectivity. For it is no accident or coincidence that AI’s impoverishment and Indigo’s expansion happened in tandem.

Indigo began its operations in 2006. All the shareholders – 47 pc each held by Rahul Bhatia and Rakesh Gangwal family and 6 pc held by individuals – had invested just Rs 61 crore in the company. What kind of back-up guarantees would have been provided by InterGlobe (the company that owns Indigo) to the lenders or lessors who gave aircrafts worth about Rs 65,000 crore to the then little known company!

All of Indigo aircrafts are on lease basis. According to its filings, of its fleet of 96 aircraft as of April 30, 2015, 22 were on finance leases and 74 were on operating leases, including 12 aircraft on short-term operating leases. Indigo did an IPO of Rs 3,130 crore in October, 2015.

Another significant factor in the AI-Indigo matter is that though Indigo began its operations in 2006, its group company, InterGlobe Technologies or IGT (a group company of IndiGo) operated Air India’s Call Centre, during January 2009 to February 2013. AI staff unions objected but the contract continued. Thus, IndiGo possessed all the vital business information on passengers, trend of ticket sales and also AI’s marketing strategy. All this was ignored by the civil aviation ministry and contributed significantly to the weakening of AI. To know the complete details read our cover story.