Investigating agencies have allegedly come across evidence indicating that the acquisition of 111 aircraft for Air India and the erstwhile Indian Airlines, decided in 2004, had been at rates higher than the price paid around the same time by some private airlines.

“It seems the aircraft sold to the then Indian Airlines and Air India was costlier as compared to those bought by certain private airliners. If it was the case, where exactly the differential was adjusted has to be looked into,” an official said.

An FIR registered by the CBI, in which unknown officials of the Civil Aviation Ministry, Central government and Air India are being probed states that the decision had been taken to get the aircraft for about ₹70,000 crore.

No benchmark

In its 2011 report, the CAG observed: “To enable effective price negotiations, it is normal (and was also necessary) to make an assessment through commercial intelligence gathered globally to assess a reasonable or threshold price (based on comparable prices paid by other buyers and other factors). However, no benchmarks for the cost of the aircraft were set by AIL [Air India Limited]/MoCA [Ministry of Civil Aviation] before negotiations were initiated.”

The agencies are also looking into the alleged losses to the national carrier on account of “liberalisation of bilateral agreements”, the timing of which — given the timing of aircraft acquisition and other factors — did not provide a level playing field to Air India, as pointed out by the CAG report. “The capacity entitlements under various bilateral agreements during the period from January 2004 (pre-liberalisation) till March 2010 had increased by 282%,” it said.