The four-member committee's unanimous proposals have been officially despatched to the Ministry of Civil Aviation and the Air-India board. The point now is whether the committee will rule out Airbus Industrie's A-340s and also the third contender MacDonell Douglas's MD-11 out of the reckoning. Air-India spokeswoman Rohita Jaidka declined to comment, saying, "any final decision will be taken only after the proposals have been approved by the board."
Boeing has great lobbying power but Airbus Industrie says it will take legal action against Boeing for projecting the wrong facts.
The stakes of the deal have been very high, even by global aircraft purchase standards. In the initial stages, Air-India's specifications had been well-defined: 23 medium-capacity long-range (MCLR) aircraft worth Rs 22,000 crore; 11 on a firm basis and 12 optional. But ICICI Securities (I-Sec), hired by Air-India to study the viability of the purchase, has reportedly suggested that the airline's financial status does not permit it to buy more than eight MCLR aircraft. And even if, claims I-Sec, Air-India increased its equity base nearly sevenfold—from Rs 150 crore to Rs 1,000 crore—this will permit it to raise a debt of only Rs 4,000 crore, which is insufficient to meet its original plans.
According to experts, though the technical committee's evaluation is significant, the actual decision-making process is a long-drawn affair. The Air-India board will send the proposals to the Public Investment Board, which, if it approves, sends it to the Cabinet Committee on Economic Affairs (CCEA). In at least two instances in the past, proposals from technical evaluation committees regarding the purchase of Boeing-767s and Boeing-757s for Air-India and Indian Airlines were turned down by the Rajiv Gandhi government.
Already the dogfight between the two biggest aircraft manufacturers in the world is being fought on a different plane. Boeing's lobbying prowess is well-known and is regarded as a factor that goes in its favour, with the US Government actively backing the deal, unlike Airbus, which is an European consortium. Boeing, for instance, joined a group of US-based transnationals to defeat a proposed US Congress legislation denying an economic aid package to India.
Meanwhile, Kiran Rao, head of Airbus' India operations, says the company will initiate legal action against Boeing for projecting wrong facts—that the A-340's speed is 0.80 Mach when the actual speed is 0.82 Mach. He says lawyers in France and the United States have already begun proceedings. Says Rao: "It is not just the MCLR deal in India, but repeatedly, over the past year or so, Boeing has been giving wrong facts. We will insist that they retract their statement on the underperformance of A-330 and A-340 models."
Boeing India President Dinesh Keskar told reporters that the company's statement had been based on the Official Airline Guide and made light of Airbus claims, saying, "no legal notice has been received so far." Civil Aviation Minister C.M. Ibrahim has hinted that a decision will be taken "in the next couple of months". So will the Americans intensify their lobbying, now that the evaluation report has been submitted?
