No contest.
Posted on 05/26/2005 9:40:15 PM PDT by Srirangan
Economy | Europe | USA
NEW DELHI - A transcontinental dogfight is being played out in India, underlining the truism that politics and big business go hand in hand. At loggerheads are the European Union, particularly France, and the United States, over a US$7 billion deal for 50 aircraft by India's state-owned international airline Air-India, which has decided to award the contract for its fleet augmentation to Seattle-based Boeing. It was the biggest order ever placed by any Indian corporation - private or public - to a single company.
European aircraft giant Airbus Industrie has cried foul, arguing that the Air-India board had endorsed Airbus aircraft twice, once in 2003 and again in November 2004. Clearly, something has changed in the last few months. The opposition parties have joined in with allegations of money, up to $500 million, having changed hands to swing the deal.
French displeasure led the French Ambassador to India, Dominique Girard, to take up the issue. In a direct affront, Girard said that France feels that "some factors other than commercial" have influenced the deal, a contention which was strongly rebutted by the Indian government. Girard added that France hopes that India will consider "comprehensive factors" while going shopping for 126 fighter planes for the Indian Air Force; French Mirages will be competing for that pie.
As usual in public-sector deals, conspiracy theories abound, with allegations made recently that funds ranging from defense purchase allocations, to privatization proceeds, to money for flood relief all said by some to have been siphoned off. Such is the fear of malfeasance charges that the last aircraft Air-India bought was 10 years ago, while Indian Airlines, the domestic state carrier, last bought an aircraft in 1986.
The Boeing deal comes at a time of rapid change in the Indian airline sector, which is under huge pressure to improve. Reforms in other segments of the Indian economy have brought about a vast change in services and customer care by hitherto lethargic government units. Public-sector banks like State Bank of India have improved remarkably in the face of competition from private banks. Similar changes have occurred at the Life Insurance Corporation and public-sector telecom companies, such as VSNL, BSNL and MTNL.
Matters had to change fast in aviation as well, since the two government-owned airlines - Air-India and Indian Airlines - were facing the heat due to competition from private airlines as well as increased passenger travel. Several private carriers, including Air Deccan, Spice Jet and Kingfisher, apart from Sahara and Jet Airways, have entered the fray, driving domestic airfare to levels below train tickets. As per the government's new open-skies policy, private airlines have even been allowed to fly some international routes, with intense lobbying to open up further.
International travel to and from India used to follow a warped system. For example, even if a US airline wanted to increase the number of flights, it could not. Under a 50-year old bilateral agreement, US carriers could not increase the number of flights unless there was a corresponding increase by a "designated" Indian operator (Air-India) so that revenues were equally shared. Indian private airlines could not fly to the US and Air-India did not have enough aircraft. The result was, the more than 2 million passengers who travel between India and the US every year were hamstrung by insufficient seats.
In the face of such shortages, the Air-India deal is welcome, though there is still a long way to go. A long-term solution can only be found if the recommendations of the Naresh Chandra committee are considered for possible adoption by the civil aviation sector. The Chandra panel has suggested privatization of Air-India and Indian Airlines, and proposed a hike in allowable foreign direct investment in airlines up to 49%, a move that is being resisted by left-wing parties, who are key coalition allies of the ruling Congress government.
India's Civil Aviation Minister Praful Patel said in a recent interview: "Acquisition has always been an acrimonious issue, with rivals trading charges. This phenomenon is not unique to India, it is seen worldwide. On the one hand, we deprive our carriers of newer fleet and capacity, and on the other, we expect them to compete with the best. This contradiction must end."
The US plays its cards Behind the din of a business deal gone awry (for Airbus at least), has been the silent political lobbying that went into pulling it off. Observers say the choice of Boeing is an attempt by India to balance relations between Europe and the US after the domestic state-run carrier, Indian Airlines, recommended Airbus for the second time to augment its fleet by 43 aircraft late last year. Clearly, geopolitics impacted the deal that seems to have turned on its head in the last few months.
The US administration left no stone unturned to back Boeing to win the contract. President George W Bush personally spoke to Prime Minister Manmohan Singh over phone about the purchase and reiterated the same when Foreign Minister Natwar Singh met him in Washington recently. Secretary of State Condoleezza Rice, on a visit to India in March, sounded out the Indian leadership about US interest in India choosing Boeing. The deal also sits well in the overall climate of US-Indian bonhomie, with the US lifting sanctions on arms exports as well as high-technology dual use supplies. From the Indian side, the sops include the new open skies pact that has replaced the 50-year-old arrangement and frees airlines of both countries from all restrictions on fight frequency, destination and prices. The US has already signed such agreements with 60 other countries. For India, it was the first. US Transport Secretary Norman Mineta, who signed the agreement with Indian counterpart Patel, urged India to go for Boeing.
"India has made the United States happy with the Air-India contract after it pleased the European Union last year with the Indian Airlines order," professor Brahma Chellaney of the Center for Policy Research has been quoted as saying. "The deal is part of a strategy to present a picture of healthy India-US relations, which have been growing in the last few years. Such huge contracts are decided at the political level and that's what has happened this time too."
In the past 12 months, Boeing has been flying high in the global market. Boeing has sold 255 Boeing 787s as against 154 Airbus A380s. Airbus lost recent deals with Korean Air and Air Canada. India's Kingfisher, however, went with Airbus, having ordered 30 A320s, the first of which was delivered last month.
India is looking to significantly improve its infrastructure facilities for air travel, a crucial link for both business travelers and tourist arrivals. Round one went to Europe, with the Indian Airlines deal, and round two to the US, with the Air-India deal. But it's clear that the fight will go on. Because India, along with China, is the place where most planes will be sold in the coming years as air travel explodes in the region. And Boeing and Airbus won't be left out of the action.
Settle it with a dog fight. A 3-day competition of jumbo-jet on jumbo-jet action.
Boeing makes F-15s and F-18s.
Singapore also just announced a big Boeing buy.
They'd object to that as hardly fair, stacking fighters against a lumbering transport, however modern. I suspect they would agree to an "older large multiengine aircraft."
They bring the A380, we bring the Boeing B-52 loaded to the gills with air-to-air missiles.
"Another fine Boeing product!"
<< the French "ambassador" .... In a direct affront ... said that the french feel that "some factors other than commercial" have influenced the deal ... >>
Thus the representative of the epidemically-corrupt country that is host to the most profoundly systemically-corrupt airplane "sales" gang calls its most abjectly-corrupt customer "black."
Why, next thing you know pots will be so calling kettles!
Missiles! 50 calibers in the nose of each jumbo jet..unlimited ammo! maybe a group of 6 planes on each side...that would be a riot...can you see them turning on each other? what a laugh
Nah, let's mount some GAU-8 (30mm Gatling gun from the A-10) units in the 747s. The French have nothing so vicious.
Heck, we could probably put a belly turret on the 747 with the 30mm inside, and it wouldn't care.
Isn't there a "Laser" system being tested in a 747?
The "Laser" should be good.
No contest.
True, that does qualify as a 747.
Byebye Airbus. :)
France has now threatened to block India's attempt to become a permanent member of the U.N. Security Council all because Air India ordered Boeing instead of Airbus.
These slimy greaseballs can't even see how blatantly hypocritcal they are. First they complain by implying that India is buying from Boeing because of "other than commercial factors". Then they do the very thing they were complaining about by threatening to block India from the SC if they don't buy Airbus. It boggles the mind!
I would wish for the worthless country of France to just disappear but their little hissy fits can be so damn entertaining sometimes.
ping!
"France has now threatened to block India's attempt to become a permanent member of the U.N. Security Council"
--- I hadn't realized that the plan to remove fwance from the council was that far along!
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