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Monday, 20 February, 2012, 10 : 00 AM [IST]

Centre plans booster package for Indian airlines

With all scheduled airlines, except low-cost carrier (LCC) IndiGo, deep in red, the government is planning to work out a package for the ailing sector. The Civil Aviation Ministry recently asked all airlines to submit their financial position on issues like debt and working capital requirements. A panel led by Nasim Zaidi, Secretary – Aviation, Ministry of Civil Aviation, India’s most experienced IAS officer in the field of aviation — will look into the specific requirements of the industry to make it sustainable.

Airlines like IndiGo, Air India, Jet Airways, Kingfisher Airlines, SpiceJet and GoAir are learnt to have submitted their financial details with the government. Despite being the fastest-growing domestic aviation market globally, Indian carriers are making huge losses due to high sales tax levied by states on jet fuel and high airport charges.

The accumulated losses and debts of Jet, AI, Kingfisher and SpiceJet were Rs 1.18 lakh crore on September 30, 2011. According to the Centre for Asia Pacific Aviation (CAPA), Jet, AI and Kingfisher’s cumulative share in this figure is Rs 1.1 lakh crore. AI leads the pack with Rs 79,000 crore, followed by Jet group’s Rs 18,532 crore and Kingfisher’s Rs 13,625 crore. Of the LCCs, SpiceJet and GoAir make low losses, while debt-free IndiGo’s accumulated profits are above Rs 1,000 crore. Accumulated airline losses till September 30 were almost Rs 38,000 crore. Bank loans amount to Rs 70,000 crore and Rs 10,000 crore owed to vendors by the full-service carriers, estimates CAPA. Based on the findings of the Zaidi panel, the aviation ministry would push for the agenda with other stakeholders like banks and the finance ministry, according to a report by The Times of India.

This panel has been formed to recommend structural changes soon after PM Manmohan Singh’s assurance last year that the government would find “ways and means” to help the airline industry. He had, however, stressed that private sector airlines should be managed efficiently. The government promised to give relief to AI by getting the financial sector to restructure its loans of Rs 18,000 crore and also gave fresh cash credit of Rs 2,200 crore. Ailing Kingfisher, however, is yet to get a favourable response from banks, which have been asking for fresh equity infusion from promoters before opening their purse strings.
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