93 PERFORMANCE OF CIVIL AVIATION IN INDIA MINISTRY OF CIVIL AVIATION PUBLIC ACCOUNTS COMMITTEE 2013-2014 NINETY-THIRD REPORT FIFTEENTH LOK SABHA LOK SABHA SECRETARIAT NEW DELHI NINETY-THIRD REPORT PUBLIC ACCOUNTS COMMITTEE (2013-14) (FIFTEENTH LOK SABHA) PERFORMANCE OF CIVIL AVIATION IN INDIA MINISTRY OF CIVIL AVIATION Presented to Lok Sabha on 6.2.2014 Laid in Rajya Sabha on 6.2.2014 LOK SABHA SECRETARIAT NEW DELHI February, 2014/ Magha, 1935 (Saka) PAC No. 2020 Price: ` 200.00 © 2014 BY LOK SABHA SECRETARIAT Published under Rule 382 of the Rules of Procedure and Conduct of Business in Lok Sabha (Fourteenth Edition) and Printed by the General Manager, Government of India Press, Minto Road, New Delhi-110 002. CONTENTS PAGE COMPOSITION OF THE P UBLIC ACCOUNTS COMMITTEE (2013-14)........................... (iii) COMPOSITION OF THE P UBLIC ACCOUNTS COMMITTEE (2012-13)........................... (v) COMPOSITION OF THE PUBLIC A CCOUNTS COMMITTEE (2011-12)........................... (vii) INTRODUCTION ................................................................................................. (ix) REPORT PART I CHAPTER I Introductory .......................................................................... 1 CHAPTER II Acquisition of Aircraft by Erstwhile Air India Limited (AIL) .... 3 CHAPTER III Acquisition of Aircraft by erstwhile Indian Airlines Limited (IAL) ......................................................................... 38 CHAPTER IV Merger of AIL and IAL into NACIL ...................................... 55 CHAPTER V Liberalised policy towards Bilateral Agreements on International Entitlements ..................................................... 75 CHAPTER VI Operational performance ....................................................... 89 CHAPTER VII Financial performance ........................................................... 104 CHAPTER VIII Miscellaneous ....................................................................... 114 PART II Observations and Recommendations ................................... 119 ANNEXURES I. Brief chronology of events related to the acquisition of aircraft by the erstwhile AIL .............................................................. 141 II. Minutes of the meeting held on 2nd August, 2004, chaired by the then Minister, Civil Aviation............................................ 143 III. Letter from 43 member delegation of US Congress regarding AlL's proposed aircraft acquisition forwarded by PMO to MoCA ................................................................................... 145 IV. Clarifications regarding its traffic and market share assumptions provided by Air India ............................................................ 151 V. A copy of the Restricted Letter Agreement 6-1166-DJG-776 on the subject 'Liquidated Damages-Non-Excusable Delay' in the Purchase Agreement Number 2998 between the Boeing company and erstwhile Air India Limited relating to Boeing Model 787-837 Aircraft .......................................................... 152 (ii) PAGE VI. Brief chronology of events related to the acquisition of aircraft by the erstwhile IAL.............................................................. 154 VII. Expenditure incurred by Air India on maintenance/repair/ servicing of aircraft in foreign countries during last five years...................................................................................... 156 VIII. A copy of the presentation made by the Ministry of Civil Aviation before the Prime Minister in March, 2006 on the issue of the proposed merger of AIL and IAL ................................ 159 IX. The overall synergies realised as on 31 Dec., 2011 for Air India to the tune of approximately ` 1535 crore............................. 165 X. List of all completed, in progress and not initiated items department-wise of Air India ................................................. 166 XI. Details regarding industry standards for aircraft utilization .... 174 XII. Details of the reasons for increase in loss of Air India from 2007-08 onwards .................................................................... 176 APPENDICS I. Minutes of the Thirteenth Sitting of the Public Accounts Committee (2011-12) held on 11th January, 2012 ................... 179 II. Minutes of the Fifteenth Sitting of the Public Accounts Committee (2011-12) held on 19th January, 2012 ................... 181 III. Minutes of the Seventeenth Sitting of the Public Accounts Committee (2011-12) held on 22nd February, 2012................. 184 IV. Minutes of the Sixteenth Sitting of the Public Accounts Committee (2013-14) held on 30th January, 2014 ................... 187 COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE (2013-14) Dr. Murli Manohar Joshi — Chairman MEMBERS Lok Sabha 2. Shri Anandrao Vithoba Adsul 3. Dr. Baliram 4. Shri Ramen Deka 5. Shri Sandeep Dikshit 6. Dr. M. Thambidurai 7. Shri T.K.S. Elangovan 8. Shri Jayaprakash Hegde 9. Dr. Sanjay Jaiswal 10 Shri Bhartruhari Mahtab 11. Shri Abhijit Mukherjee 12. Shri Sanjay Brijkishorla1Nirupam 13. Shri Ashok Tanwar $14. Shri Ajay Maken 15. Shri Dharmendra Yadav Rajya Sabha 16. Shri Prasanta Chatterjee 17. Shri Prakash Javadekar **18. Shri Ashwani Kumar 19. Shri Satish Chandra Misra ††20. Dr. V. Maitreyan 21. Shri N.K. Singh 22. Smt. Ambika Soni SECRETARIAT 1. Shri Devender Singh — Joint Secretary 2. Smt. A. Jyothirmayi — Deputy Secretary $ Elected w.e.f. 14th August, 2013 vice Dr. Girija Vyas appointed as Minister of Housing, Urban Development and Poverty Alleviation w.e.f. 17th June, 2013. ** Elected w.e.f. 3rd September, 2013 vice Dr. V. Maitreyan ceased to be a Member upon his retirement as a Member of Rajya Sabha w.e.f. 24th July, 2013. †† Elected w.e.f. 3rd September, 2013 vice Dr. E.M. Sudarsana Natchiappan appointed as Minister of State for Commerce and Industry w.e.f. 17th June, 2013. (iii) COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE (2012-13) Dr. Murli Manohar Joshi— Chairman MEMBERS Lok Sabha 2. Shri Anandrao Vithoba Adsu1 3. Dr. Baliram 4. Shri Sandeep Dikshit 5. Dr. M. Thambidurai 6. Shri T.K.S. Elangovan 7. Shri Anant Kumar Hegde 8. Shri Bhartruhari Mahtab 9. Shri Sanjay Brij Kishor Lal Nirupam 10. Shri Shripad Yesso Naik †11. Shri Abhijit Mukherjee 12. Shri Ashok Tanwar †13. Shri Takam Sanjoy 14. Dr. Girija Vyas 15. Shri Dharmendra Yadav Rajya Sabha 16. Shri Prasanta Chatterjee 17. Shri Prakash Javadekar 18. Shri Satish Chandra Misra 19. Shri Sukhendu Sekhar Roy 20. Shri J.D. Seelam 21. Shri N.K. Singh 22. Prof. Saif-ud-Din Soz † Elected w.e.f. 6th December, 2012 vice Shri Sarvey Sathyanarayana appointed as Minister on 28th October, 2012. †† Elected w.e.f. 6th December, 2012 vice Dr. Shashi Tharoor appointed as Minister on 28th October, 2012. (v) COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTE (2011-12) Dr. Murli Manohar Joshi — Chairman MEMBERS Lok Sabha 2. Shri Anandrao Vithoba Adsul 3. Dr. Baliram 4. Shri Sandeep Dikshit 5. Shri Anant Kumar Hegde 6. Dr. Bhartruhari Mahtab 7. Shri Shripad Yesso Naik 8. Shri Snajy Brij Kishorlal Nirupam 9. Shri Jagdambika Pal 10. Dr. Kavuru Sambasiva Rao 11. Shri Adhi Sankar 12. Kunwar Rewati Raman Singh 13. Shri K. Sudhakaran 14. Dr. M. Thambidurai 15. Dr. Girija Vyas Rajya Sabha 16. Shri Tariq Anwar 17. Shri Prasanta Chatterjee 18. Shri Naresh Gujral 19. Shri Prakash Javedekar 20. Shri Satish Chandra Misra *21. Shri. J.D. Seelam 22. Prof. Saif-ud-Din Soz * Elected w.e.f. 29th August 2011 vide the vacancy occurred vice Smt. Jayanti Natarajan appointed Minister w.e.f. 12th July. 2011. (vii) INTRODUCTION I, the Chairman, Public Accounts Committee (2013-14), having been authorised by the Committee, do present this Ninety-third Report (Fifteenth Lok Sabha) on 'Performance of Civil Aviation in India ' based on C&AG Report No. 18 of 2011-12, Union Government (Civil) relating to the Ministry of Civil Aviation. 2. The Report of the Comptroller and Auditor General of India was laid on the Table of the House on 8th September, 2011. 3. The Public Accounts Committee (2011-12) selected the subject for detailed examination and report. The Committee took evidence of the representatives of the Ministry of Civil Aviation, Air India (Al) and some Associations/Unions of Air India on the subject at their sittings held on 11th January, 2012, 19th January, 2012 and 22nd February, 2012, respectively. As the examination of the subject could not be completed, the Public Accounts Committee (2012-13) and the Public Accounts Committee (2013-14) re-selected the subject for examination. The Committee considered and adopted this Report at their sitting held on 30th January, 2014. Minutes of the Sittings form Appendices to the Report. 4. For facility of reference and convenience, the Observations and Recommendations of the Committee have been printed in thick type in the body of the Report. 5. The Committee thank their predecessor Committees for the valuable work done by them. 6. The Committee would like to express their thanks to the representatives of the Ministry of Civil Aviation, Air India and Indian Airlines Officers Association, Indian Aircraft Technicians Association, Air India Aircraft Engineers Association and Airlines Ground Instructors Association for tendering evidence before them and furnishing the requisite information to the Committee in connection with the examination of the subject. 7. The Committee place on record their appreciation of the assistance rendered to them in the matter by the office of the Comptroller and Auditor General of India. NEW DELHI; DR. MURLI MANOHAR JOSHI 31