Federal police in India have launched a criminal investigation of conspiracy and corruption allegations associated with a 2005 decision authorizing Air India to buy 68 Boeing jets for $11 billion.
India's Central Bureau of Investigation said an India Supreme Court ruling in January ordered police to investigate alleged irregularities in the jet deal.
The national police force known as the CBI said its investigation is focused both on the Boeing order – which was at the time the largest order in Indian civil aviation history – and a 43-jet order placed with Airbus in 2006 by Indian Airlines, a second state-owned airline. The two airlines merged in 2007.
Police said they're investigating why the two airlines ended up buying a total of 111 jets when the government's original plan was to buy 28 jets for both airlines, The Times of India reports.
"Such a purchase caused an alleged financial loss to the already stressed national carriers" while benefitting foreign aircraft manufacturers, the CBI said in a news release that did not name Boeing or Airbus.
Boeing (NYSE: BA) spokesmen in Seattle did not respond to a request for comment. Boeing India also has made no comment.
The CBI said detectives are also probing allegations that unidentified officials within the Government of India's Ministry of Civil Aviation who oversaw the jet purchases conspired to place inflated orders which allegedly benefited foreign jet manufacturers at the airlines' expense.
Two other related matters are also under investigation, the police statement said.
The CBI said it is probing allegations that even as the program to acquire 111 jets was underway, the airlines leased a large number of additional aircraft "without due consideration, proper route study and marketing or price strategy." It did not say how many jets were leased or from whom.
Lastly, Indian police said detectives are also investigating allegations claiming that after buying and leasing all the jets, "unknown officials of Ministry of Civil Aviation (Govt. of India), Air India and other unknown private persons and companies" conspired and colluded to surrender Air India's profit-making routes and landing slots "in favor of national and international private airlines causing a huge loss to the national carrier."
Air India’s major aircraft deal with Boeing was controversial at the time. A day after the Mumbai-based carrier chose to buy 23 Boeing 777 aircraft, 27 Boeing 787 Dreamliners and other jets, Airbus’s then vice president of sales for India said in an interview that the European company wasn’t given a “fair chance,” Bloomberg reported.
Air India denied the suggestion, saying it took “strong exception” to the claims.
India's comptroller and auditor general subsequently criticized the decision-making surrounding the Boeing jet orders, and Indian Parliamentary committees launched their own inquiries.
