Monday, April 7, 2008

Response to Prajay Patel (Praful Patels son)

1st: There is no Ceejay Group Venture into container cargo business.

So are you saying on record that the family is NOT into any business dealing with containers/logistics? Nothing even remotely to do with MIHAN? or another project in Birsi near Gondia?
2nd: Mr. Naresh Goyal was present when the AI 777s came in. So was the MoCA present when the 9W 77Ws came in.

Hmm!! the first time? I remember it being discussed on this forum on how VJM was present and NG wasnt... It was even raise din Parliament: on how VJM presence in the Parliamentary Commitee on Aviation presents a conflict of interest situation.

4th: What is your business is Salman Khan comes to my sister's wedding. He did his performance because he wanted to as a friend and not because he was paid. He by the way did not take money for it. Fill an RTI and find out if you want.
FYI an RTI is used against Govt departments, not against a private individual. Salman Khan may go wherever he likes.Thats not the point.

Cougar you know not everything with "PP" is always about the money.

Sure! who needs money when you have airline owners falling head over heels to arrange for stuff for their "beloved minister". Can you confirm if any money was paid for all the flying that happened that day?

5th: Whose aircraft? Well i dont care about opening up stuff to the forum. These stars came all the guests that were there. If these guest had their own planes then let them come what difference does it make to your life or any other person in this country. Has anybody complained about.

The stars came by their OWN planes? Anyways my concern is not with the gueslist. My concern is at the lavish wedding and the manner in which aircraft from a particular airline were requisitioned. Our investigations show atleast 3 aircraft belonging to a private airline were used on that day operating multiple flights from Delhi and Mumbai. Who paid for these? No one! Pretty expensive wedding gift must say! It would have been one thing if the receiver of the gifts had been a ordinary businessman. Its quite another thing when the receiver is the Minister for Civil Aviation with the power to dispense license applications


6th: The BCCI may get its planes where ever i dont know nor do i care. But a matter of fact it is that whenever Sonia Gandhi travels she usually gets a Tata Falcon through the ministry. Senior Congress leaders get pvt planes for themselves by asking.
So whats wrong in sharad pawar getting a pvt plane. If people are willing to give planes for a flight or two here and there what is the harm?
I will pass on the allegations you have made against Sonia Gandhi on this forum. But that apart, the source that the BCCI and Sharad Pawar use for their aircraft "charters" betrays a symbiotic "you scratch my back and I scratch yours" relationship. A relationship that goes against the level playing field that is so important in a free market.

PRajay: I understand that you may be upset at reading some things. But we are not discussing your father. We are discussing the Civil Aviation Minister. And this is not the only forum or site or magazine that is discussing these details. Corrupt ministers and their corruption will be discussed in public: that is a privilege of democracy. Praful Patel is a politician and in a democracy people have a right to raise questions. Do Lalloos children get worked up when they read about their fathers corruption in the papers?
It is my belief that the unholy friendship between VJM and Pee Pee and the preferential treatment given to KF does not bode well for Indian Aviation and I shall continue to speak out against it. Some of the other members here may be in awe of having a ministers son in their midst. Yet others are hoping for an invite then next time an A380 comes visiting (as i have been told on IM by various members here). But i am neither in awe nor scared of the fact that a ministers son is out here. It is wrong on your part to exert influence on this forum and bully people to prevent anything from being spoken about against your father. If you are upset by the questioning out here, then you are free to leave!!

The fact remains that the families of VJM and Pee pee are closely networked. The frequency with which a certain Bentley "Flying Spur" is spotted at Vijay Mallyas Nepeansea Road residence betrays this closeness.
Is this a good thing for Indian aviation? Having a minister so closely linked with an airline in this manner? Doesnt this throw up questions of Conflict of Interest?

Sunday, November 25, 2007

Controversy in the air
The suspension of Air-India's Managing Director at a time when the disinvestment process in the airline is at an advanced stage triggers a controversy.


ANUPAMA KATAKAM in Mumbai


AIR-INDIA has hit rough weather once again. This time the turbulence was caused by the suspension of its Managing Director, Michael P. Mascarenhas, on charges of corruption.

On May 23, the Ministry of Civil Aviation charged Mascarenhas with corruption, saying that in 1998 he had "unduly favoured" Welcome Travels, Air India's ex-general sales agent (GSA) in London. The Ministry says the airline lost approximately Rs.57 crores because of extra commissions, called product linked incentives (PLI), that Mascarenhas sanctioned over a period of time. Investigations made by the vigilance department of the Civil Aviation Ministry, the chief vigilance officer (CVO) of the airline, and the Comptroller and Auditor General (CAG) confirmed the "undue favour" in a report. This led to the suspension.
Mascarenhas, however, rebutted the charges and said that "it is a deep-seated conspiracy and a deliberate smear campaign. They have cooked up an issue and created a case." He argues that his suspension is a deliberate effort to slow down and sabotage the disinvestment of the national airline. The GSA issue was created by distorting facts, he says.
Political interference is common in the airline's functioning. Apparently, Mascarenhas is in favour of disinvestment, whereas some of his colleagues and Civil Aviation Minister Sharad Yadav are not.
Suspending a top officer when the troubled airline is in the final stages of the disinvestment process is seen as an inadvisable move. The allegations are serious, but perhaps more important is the issue of jeopardising the airline's future.
In a statement made to the press after the suspension order was served on him, Mascarenhas said: "The order is highly irregular and clearly motivated and has been based on charges framed with mala fide intention. I am seeking legal opinion and will move the appropriate court of law. In fact, it was my suggestion to hand over the case to the Central Bureau of Investigation (CBI)."
Other officers who have come under a cloud are Commercial Director H.S. Uberoi and Regional Directors P.K. Sinha and Capt. K. Bihari. All the officers have decided to challenge the allegations in court. Meanwhile, the Air-India investigation into increased percentage in commissions has now been referred to the CBI.
This latest controversy triggered a round of mud-slinging between Mascarenhas and the now-reinstated Commercial Director V.K. Verma. It escalated in early May after Mascarenhas refused to comply with the orders of the Civil Aviation Ministry to reinstate Verma as Commercial Director. Verma had been chargesheeted for failing to attend to work for seven months without giving any valid reason. The spat began last October when Verma made a militant speech on the demerits of privatisation at an employees' meeting. A tape-recorded version of this speech found its way to the Prime Minister's Office and Verma was demoted as Director, Corporate Affairs. Verma went on indefinite medical leave.
Sources in Air-India say that Verma and Sharad Yadav share a common opinion about disinvestment. And once the issue died down, the Minister had Verma absolved of the charges and ordered his reinstatement. Mascarenhas, however, complicated the situation by refusing to implement the Ministry's directive.
Air-India was once a "Maharaja" in its class. Unfortunately, for reasons common to all public sector undertakings (PSUs) in the country, Air-India deteriorated to such an extent that it is now one of the least preferred airline for international travel. The company is so steeped in debt, says an Air-India official, that it does not have money to install an in-flight entertainment system, let alone upgrade its fleet. As very little capital was pumped into the airline, it could never expand and, therefore, lost out in the race.
One of Air-India's biggest problems is that it has very high distribution costs compared to other international airlines. The GSA system, which demands PLIs, is a bane to the company's finances. PLI is given to agencies to motivate them. Because of the highly competitive market, the airline had to pay its GSAs high PLI commissions along with a 3 per cent over-riding commission on revenue accrued from flights. In addition, a 9 per cent commission is paid to agencies on passenger ticket sales. Certain GSAs like Welcome Travels are given an additional commission, as a bonus for generating optimum business. Air-India has 34 GSAs worldwide and two private companies who operate as GSAs in India.
When the airline began to lose revenue rapidly, the issue of its high distribution costs was taken up by the Ministry in 1997; Air-India board looked into it in 1998. The carrier was losing approximately Rs.300 crores annually. A memorandum circulated among board members stated that the percentage of special promotion expenditure paid by Air-India to its GSAs was 18.34 in 1992. It soared to 34.77 in 1997. The note said that "one of the reasons for the increase in incentives and commissions is the appointment of GSAs." In March 1998, the board passed a resolution suggesting that distribution costs and incentive payments be reduced in order to increase yields. Measures were taken to strengthen strategy and improve the company's financial situation, an Air-India official told Frontline. By cancelling GSA licences and appointing consolidators instead, the airline was able to preventing the payment of high commissions.
Welcome Travels remained a GSA until mid-2000. Verma told Frontline that he found it strange that while other GSAs were either being cancelled or not given commission raises, Welcome Travels asked for and got substantial increases in PLI percentage. This obviously prompted him to get the Central Vigilance Office at Air-India to investigate the agency. In October 2000, the acting CVO, M.B. Sagar, submitted a report which stated that senior Air-India officials including Mascarenhas misused their positions to give "undue favours" to Welcome Travels.
A detailed press release issued by the Press Information Bureau (PIB) in Mumbai on behalf of Air-India reports that in May 1993, when Mascarenhas was Commercial Director, the PLI for Welcome Travels was increased from 3 to 5 per cent. The commission was raised on a post-facto basis and, therefore, was given for the financial year April 1992 to March 1993. With this, Welcome Travels would have earned approximately Rs.1.3 crores annually. Justifying the decision, Mascarenhas stated that on account of flight cancellations in the aftermath of the demolition of the Babri Masjid in December 1992 and the flight engineers' strike in February-March 1993, the airline had to increase the PLI. But the PIB release says that documents revealed that the assurance of the increase was in fact given to the GSA in August 1992 when Mascarenhas visited London and had a meeting with it. "Happenings of Ayodhya in December 1992 and Flight Engineers strike in February 1993 could not have been known to him in August 1992."
The commission at 5 per cent remained unchanged for the next five years and helped the GSA earn over Rs.8 crores. In May 1998, the PLI to the same GSA was once again increased, this time to 7 per cent. Here also, it was on a post-facto basis for the year April 1997-March 1998. This increase continued for three years, fetching Welcome Travels another Rs.13 crores. When questioned by the CVO, Mascarenhas said that the passenger capacity between India and the United Kingdom had crashed by 42 per cent that year - which meant the airline had to enhance the percentage of incentive. But on cross-checking with other international airlines, the CVO found that the reduction in capacity was only 3 percent.
None of Air-India's other GSAs received the benefit of increased percentage in commissions. The CVO's report says that "financial irregularity has been committed only due to manipulation in 1993 and again in 1998". Moreover, the 1998 increase came after entire the year's financial figures were announced. The report notes that interestingly in the first instance Mascarenhas was Commercial Director while in the second, Managing Director. "Other Managing Directors are not under probe as they have not been party to payment of inadmissible commissions," the report says.
In response to the accusations Mascarenhas issued a document rebutting every charge. To begin with, he says, Sagar cannot author a report against him as he does not have the power to investigate the airline's Managing Director, much less suggest suspension. He says Sagar did not have the qualification to be a CVO. According to the Central Vigilance Commission's rules, the CVO has to be of the rank of Inspector-General of Police or above. Hence Sagar's appointment is questionable as he was only a Deputy Superintendent of Police, he says.
Mascarenhas says that proposals for an increase in PLI has to be approved by seven or eight people before it reaches the Managing Director. "Any decision taken in Air-India is a collective decision. You cannot pin down one or two people."
With regard to the 1992 increase, he says the proposal for an increase came up in August 1992 and was cleared in May 1993. Meanwhile, the Ayodhya problem and riots affected travel. Air-India had to make up its sales by increasing PLIs. The percentage of overriding and passenger sales commission given to GSAs follow an International Air Transport Association (IATA) standard. PLI, on the other hand, depend on factors such as market conditions. Since the London sector was threatened during both instances, Welcome Travels received a higher commission in those years. As per industry practice, PLIs have to be reviewed every year, he says. "Our London GSA earns 8 per cent of our revenues. We cannot dismiss them so easily."
As with all PSUs, Air-India's finances are audited by a list of government-approved auditors every year. "Why did they not raise objections to these decisions at that time? How is it that they suddenly bring it up after all these years?" says Mascarenhas.
Air-India Employees Guild leader George Abraham says that PLI decisions are extremely subjective. "This has had an adverse effect on the company. Nobody will want to take decisions now," Abraham told Frontline. "Mascarenhas is an honest and competent officer and we know this is not the reason for his ouster." In fact, it was under him that the company showed this year the lowest net loss in six years, he says. The Air-India union has been in favour of disinvestment as it believes that this may be the only alternative to saving the cash-strapped airline.
Verma, however, said the Union government's decision to disinvest 60 per cent of its shares in Air-India would not be affected by Mascarenhas' suspension because the two companies interested in the airline have completed the due diligence process. "Air-India has nothing to do with the disinvestment. It is now between the Ministry and the companies," he said. He said he never opposed disinvestment. "It's the timing I don't agree with," Verma said. Since Air-India has shown a low net loss this year, he believed it could show a remarkable financial improvement by next year. This will make the airline's valuation higher at the time of bidding, he argued. "I have no intention of scuttling the airline's future. In any case, how can one or two people decide what happens to such a huge company?"
At the conclusion of the financial year 2000-01, Air-India recorded the lowest net loss in the past six years.
According to the airline's financial statement, total revenues increased from Rs.4,662 in 1999-2000 to Rs.5,180 in 2000-01 - by 11 per cent. Net losses witnessed a decline from Rs.38 crores in 1999-2000 to Rs.28.5 crores in 2000-01. The statement said the decline in loss was particularly significant because "the airline had to bear an additional expenditure of Rs.297 crores on account of the unprecedented increase in fuel prices during the year." Air-India's fuel bill has increased by Rs.435 crores in the past two years. The airline says "that if only the additional liability on account of fuel had not been there, Air-India would have made a profit in excess of Rs.260 crores this year. The remarkable performance this year will help the disinvestment process, the statement said.
Air-India obviously faces larger problems than the squabbling among its officers. Nevertheless, was it the right step to suspend a top officer who was due to retire in another six months? Incidentally, this is the first time in the international carrier's 70-year history that a Managing Director has been suspended

Friday, October 12, 2007

The development of Pune airport (and indeed that of some of the other airports) has actually SUFFERED after Praful Patel started interfering with the AAI. Managers incharge are under pressure to award all contracts for airport construction only to NCP supporters: especially in Maharashtra. Patel is a minister without any base, and even within the NCP he is seen as an interloper. Patel is trying to build his base using these contracts and that is affecting the whole process of transformation.

Speaking specifically of Pune: Why has the airport terminal project been so delayed? especially becoz the airport authorities, led by a certain no-nonsense man called Shastri, had been very pro-active and the airforce has been especially co-operative? look deeper and you will know the answers! And i dont think anyone is going to be a Pee pee fan once the mask has come off!

There is another reason for the go-slow on Pune. A new airport is being considered: 50 kms away from Pune in faraway Chakan! Almost halfway between Pune and Nashik! The original idea of shifting hte IAF from Lohegaon to the little used deolali airbase and handing over Lohegaon for civilians. Again the new airport at Chakan gives a lot more potential to our politicians to make some money!

Overall this is his record: Praful Patel has not shown the ability to rise to the occassion and do what his position allows him to do. He could if he wanted have unshackled Civil Aviation from the shackles of Ministerial regulation. Remember what Dayanidhi Maran did to telecom? Instead Pee pee sees his ministerial post as an opportunity to help his chum VJM and secure himself and his cronies financially.

His biggest disqualification is his friendship/relationship with VJM and Boeings Dinesh Keskar, which are clearly affecting his judgements and actions as minister more than any other factor: a point that we have REPEATEDLY stressing to various politicians we have been meeting.

We are concerned at the development in Civil Aviation. We are not seeing just what is there, but what CAN BE! We want a updated policy for Freight Operations. We want a special policy for Regional operations. We want to see Regulatroy powers in civil Aviation to be transferred from the ministry to a regulatory authority on the lines of what exists in Telecom and other markets: if anything Praful Patel's irresponsible mollycoddling of VJM has only reaffirmed the need to have this regulatory authority.

And for this Praful Patel must go!! There are other people who can rise tothe occassion and deliver the goods required. For Praful Patel, and others like him: the only way is OUT!

Thursday, August 30, 2007

Crony Capitalism at its worst!

Policy decisions are a means to achieve radical changes in the functioning of a ministry by laying down the framework for decision making. And the current Congress-led dispensations approach of using e-GOM's (Empowered-Group of Ministers) led by a seasoned politician like Pranab Mukherjee, who is dyed in the wool of Congress politics, is also perhaps a step in the right direction, ensuring that decisions arrived at are taken with greater consultation with the core group: institutionalising the peer-group review process with respect to vital policy decisions critical to the further growth of sectors in our economy.

However as recent incidents have shown, some of our ministers have shown that they can bend even this system to suit their needs. Since this is a blog dedicated to aviation, I will desist from speaking about the Coal, Small Industries and other ministries and restrict myself to speaking about the Minister for Civil Aviation who has truly turned manipulation of policy into a fine art!

Indian aviation is undoubtedly going through a boom and changes to archaic policies are vital if the sector has to continue growing at the rate it has been. And without doubt, Praful Patel has been one of the more pro-active with regards to changing policy. However, it is clear to anyone who observes the industry closely that these policy changes are not being taken based on what the Industry needs but based on what his friends need.

And have no doubt: Praful Patel has many friends in the industry: Friends who lobbied to ensure that this former beedi smuggler, bootlegger and financial scamster turned politician from the NCP, made it to the ministry of Civil Aviation. ANd just who are these friends? And what are these policy decisions that serve to raise suspicion?

1. Dinesh Keskar (DK) - Sr Vice President, Sales-Commercial for Boeing. Originally from Amravati and family friend of the patels with deep connections to Vidarbha where Patel's family also has business interests.

2. Vijay Mallya (VJM) - CEO KingFisher Airlines and UB Group. Family Friend and regular with Praful Patel on the Page 3 circuit. And soon to be relatives courtesy an engagement of Mallyas son with Patels daughter.

3. Naresh Goyal (NG) - Main shareholder Jet Airways. Family friends for years but have now had a falling out over Praful Patels relations with VJM.

These are just three of Praful Patels many friends. 3 who merit attention at this point because of the link between that friendship and the policy decisions being taken by his ministry.

Some policy decisions that have been affected by these relationships:

Case 1. The 35000 crore deal for 68 Boeings signed by Air India - This has been a long pending deal. The national carrier had originally opted to purchase the competing Airbus A340-300E version for their long haul requirement and 18 737-800's for their regional requirement: a selection which the management REAFFIRMED on multiple occassions during the tenure of the previous govt. The decision made sound sense: both the A340-300E and the 737-800 would be powered by the CFM56 engines with the same cores: resulting in engg savings.Being 4 engined, the A340's would not be restricted on routes or subject to ETOPS restrictions like the twin-engined Boeing 777 or 787 being offered by rival Boeing. The other state carrier Indian Airlines (IC) opted to add 43 more Airbus A32X's: a fleet type that they have been operating for over 2 decades now.

Within a month of taking over, Praful Patel, the new minister of Civil Aviation (MoCA) asks both carriers to scrap their previous choices, "relook at their fleet needs" and negotiate the deals afresh. No reason was given for the decision.

http://inhome.rediff.com/money/2004/jun/01air.htm

No reason has ever been offered by the minister on why he ordered the "relook". But almost overnight, the AI board was armtwisted into switching their original order for A340's into an order for Boeing 777's and 787's, including the 300ER version which werent even on the table earlier! The beneficiary: Boeing and Patels good pal: Dinesh Keskar.

The other carrier IC was more succesful in resisting ministerial armtwisting and quickly reaffirmed their original choice for the Airbus. Needless to say the minister has not been very happy with the IC managements "independent" streak and has been busy clipping their wings as we speak (separate post on that coming up).

Case 2: Permissions to fly abroad: As of now there exists a rule (admittedly archaic) which requires a domestic carrier to operate domestic routes for a minimum period of 5 years before it can be allowed to begin operations on international routes. Private carriers like Jet and the former Sahara slogged it out on domestic routes (with their attendant lower yields) for five long years before they finally started international operations to LHR, SIN, KTM and KUL.

There was no talk of changing policy when carriers like Deccan, Spice and Indigo asked for a change in this rule and they were even publicly snubbed by the same minister! Things changed dramatically however once the airline owned by Patel's Page-3 crony Vijay Mallya ordered some shiny new Airbus A340's to go international. From that day in Farnborough, our minister has changed his tune and is now singing a tune that carriers should not have to wait for 5 years to fly international and that this permission can be granted on a "conditional basis" based on the ministers discretion! Note that the minister is not talking of opening up the international sector completely: just selectively for his pals on a "conditional basis"!! Which means that Paramount, Indigo, and Spice will still have to slug it out or alternately (judging by how our MoCA works) by sucking up to the minister. And the urgency of the ministers calls for urging a change in this policy is becoming more and more shrill as the date for the delivery of Mallya's first A330/A340 draws nearer! Infact this has been put on the top of the agenda for discussion before the e-GOM!

Case 3: Patel has also called for a review of the policy that prohibits the serving and consumption of alcoholic beverages onboard domestic flights. Again its a no-brainer who the biggest beneficiary of this change in policy would be. Being one of the largest manufacturers of alcoholic beverages in the world, the UB group which also owns KingFisher Airlines (infact KF operates on UB-Airs AOC), is the best placed to cross-leverage their position to maximum advantage. Given Patels history of decision making based on what his pals want, this also comes up for questioning.

Then there are other issues like partiality with regards to allocation of parking space etc where existing (and larger) players like Deccan are denied parking space but KF manages to get parking space without any problems! Things like these happen because there is no mechanism to ensure that all players in the market compete on a level playing field. We have an independent regulatory authority like TRAI in telecom. we dont have that in Aviation where decisions still go through the MoCA and his whims and fancies play the biggest role in determining whether you survive or not!

I dont question the need for changes in policy. Most certainly there are archaic rules in our aviation rule book that need to be tweaked in the evolving scenario. However policy decisions should be made based on what the industry requires and not what a certain Page-3 crony or family friend may want. And in this regard, Praful Patel has certainly been guilty of practising crony capitalism of the worst kind. As a NCP man, Patel has a history of fighting the BJP and its politics. But what Patel himself is doing is similar to what a certain Pramod "2 percent" Mahajan was guilty of when that character was minister for Telecommunications. Mr.2 percent's policy decisions as telecom minister with respect to circle allocations etc served to setback the Indian Telecom industry by atleast 6 years. Praful Patels actions as MoCA fall into the same category.

CRONY CAPITALISM DOESNT DO THE INDUSTRY ANY GOOD AND CAUSES LASTING DAMAGE.

As a party, the NCP, to which Mr.patel is affiliated, has always been confused with regards to its political space. Though it tries to claim the centrist space of the Congress, its actions put it smack with the right-wing BJP which it claims to oppose. They are in a coalition and there are certain limits of the coalition govts. However should the Congress allow the image of its govt to be tarnished because of the activities of its constituent members from other parties? I think it is time the govt threw down the gauntlet and made it very clear to its alliance partners as to how far they can go....! This applies as much to the Civil Aviation as it does to other ministries like Coal, Food & Civil Supplies and Steel, where a similar dynamic exists.

I intend to write to the members of the e-GOM, Manmohan Singh and Sonia Gandhi about this issue and would urge all of those reading this blog to do the same.


Tuesday, May 15, 2007

The Caribjet leasing scam - Air India

Case history:
The state owned international carrier Air India leased 2 A310-300's on short-term leases. These leases were approved even though it was clear that the flights operated with these aircraft would make operational losses due to high lease costs. The argument at that time was that it was a short term move to retain market share and overcome "capacity shortfall" (Familiar argument?).

Later on 2 L1011-500's were also taken on lease form the same company on similar unfavorable terms. Terms which were against AI's interests were introduced into the contract obviously with the connvance of AI management. Apart from high cost, these leases were also affecting safety of flight operations since Caribjet was in charge of engineering. Caribjet used regular flying crew for conducting safety checks instead of qualified engineers.

Despite the known issues like high cost and poor maintenance: AI mgmt went ahead leased 2 moer A310-300's. Until some NGO's active in monitoring corruption got wind of the deal. The AI mgmt hurriedly scrapped the deal but then it became public that there was no exit-clause which meant AI had to pay Caribjet damages to the tune of 302 crores plus legal expenses amounting to over 10 crores!

After a short hiatus, ten years later, the leasing game scam is still very much on in the form of ad-hoc leases on very very strange terms for 777's, 767's and 757's.


Detailed link:
http://cag.nic.in/reports/commercial/2000_book4/chapter3.htm
Air India Limited (AI) concluded two wet leasing agreements between December 1994 and December 1997. The total loss incurred by Air India from its wet lease operations during the period December 1994 to December 1997 amounted to Rs. 321.92 crore. Wet lease operations accounted for 45.4% of total losses of Air India between 1994-95 to 1997-98.


Wet Lease Contract was awarded in such a manner as to entail the highest loss for AI among the available options. Award of wet lease contract for the period from December 1995 to December 1997 to the highest loss option was not based on transparent reasons.


AI awarded softer contract terms to one of the lessors as compared to the other lessor, without apparent reasons.

AI made extra payment of Rs. 1.32 crore to Caribjet due to insertion of two special clauses in their contract agreement without any apparent compulsion.

The Management terminated (4 September 1996) the wet lease agreement with Caribjet due to “several serious violations of established technical and operating procedures by Caribjet”. The Board in its 24th Meeting held on 24 September 1996 endorsed the Management’s decision. Following termination, Caribjet Inc. instituted (January 1997) arbitration proceedings at London and claimed a total amount of US$ 72.69 million (approximately Rs. 302 crore) towards damages excluding interest. The Arbitration Tribunal decided (19 January 1999) the case in favour of Caribjet and held that Air India wrongfully terminated the Wet Lease. Meanwhile AI had already incurred expenses to the tune of Rs.7.40 crore on arbitration proceedings up to November 1998. Air India Board decided (6 February 1999) to go into appeal against the award of the Tribunal in London High Court, which was still pending (May 1999).

Some related links:
http://www.thehindubusinessline.com/2003/02/05/stories/2003020502530500.htm

http://economictimes.indiatimes.com/articleshow/381521.cms

http://www.expressindia.com/ie/daily/19991130/ige30009.html

http://www.india-today.com/itoday/20010604/business.shtml

http://www.telegraphindia.com/1030205/asp/nation/story_1640516.asp