Mumbai : The government is working on a relief package for a battered airline industry that an aviation consultancy forecasts will lose up to $1.9 billion this financial year, mainly from rising costs and low fares.
Jet Airways and state-owned Air India, two of the biggest and oldest carriers, are struggling to stem losses in the domestic aviation market, where competition is intense and fuel taxes are high.
But Rajiv Nayan Choubey, the top civil aviation bureaucrat, said on the sidelines of the International Aviation Summit in New Delhi that help to cut airline costs was on the way.
He did not give details of the measures planned.
“What’s happening today is not sustainable,” Ajay Singh, chairman and co-founder of SpiceJet, said on the sidelines of the conference. “Airlines and the government will have to work together to make sure that India remains a great aviation story.”
Challenges for the airlines include high fuel taxes and a goods and services tax on maintenance operations that makes domestic work uncompetitive, consulting firm CAPA India said in a report on Monday.
It forecast an industry loss of up to $1.9 billion in the financial year ending March 31, up from a January estimate of a loss of $430 million to $460 million, the difference fuelled largely by a weakening rupee and a rise in oil prices. CAPA estimated that India’s airlines, including Air India, need an additional $3 billion of capital in the near term to shore up balance sheets. In June, the government said it had been unable to attract bidders for a stake of 76 per cent in Air India.
Indian airlines, which have ordered hundreds of new Airbus SE and Boeing Co jets, have struggled to stay profitable despite filling nearly 90 percent of seats as domestic passengers numbers have more than doubled over the past four years.
The cut-throat competition and high fuel prices weigh on airlines big and small.
In July, budget carrier IndiGo reported its lowest quarterly profit in three years, with earnings down 97 per cent.
Air India gets Rs 2,100-cr borrowing from govt
New Delhi: Air India has received Rs 2,100 crore government-guaranteed borrowing and Rs 860 crore of equity infusion under the first tranche of financial support plan for the debt-laden carrier, Civil Aviation Secretary RN Choubey said on Tuesday.
“This aid is over and above the budgetary support and the turnaround plan for Air India. We expect to finalise a complete plan for Air India in one month,” Choubey said. Air India had outstanding loans worth Rs 48,450 crore as of March 31, 2017, on its books. The government had invited initial bids for selling stake in Air India on Mar 28 but failed to solicit even a single expression of interest, despite extending the deadline to May 31 from May 14.
Time and again, the Centre has said it is committed to undertaking strategic divestment of Air India, while maintaining the airline remained competitive to lure bidders.
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