Indian airlines seek waiver from airports, oil firms for financial revival

FIA, a group consisting of IndiGo, SpiceJet, Jet Airways, Go Air said such a move would help them revive financials of the firms

Financially stressed  Indian airlines want all airports and oil-marketing companies to grant them a month’s extra and unsecured credit to improve their liquidity and waive penalties for late payment.

The Federation of Indian Airlines (FIA), a lobby group of IndiGo, SpiceJet, Jet Airways and GoAir, told the aviation ministry that this would help revive their stressed finances.

“We request (this) to tide over these tough times and with a commitment from member airlines to make staggered payments over the next few months,” went its letter to Aviation Secretary Rajiv Narayan Choubey. FIA members together have over 80 per cent of the aviation market.

In 2009 and 2011, during similar periods of loss, the airlines had asked the government to likewise step in. 

Business Standard has reviewed a copy of the letter. “All  member airlines are constantly monitoring their operations and  cost control measures... We are sure that given the needful assistance at this time, the sector will be restored to its healthy trajectory,” it says. 

High fuel prices and a weaker rupee have increased the operating cost of Indian carriers. At the same time, they have been unable to raise fares because of  high competition. All the three listed airlines have reported losses. This includes market leader IndiGo, which has a little over 40 per cent of the home market. 

It reported a loss of around Rs 6.5 billion for the September quarter, its first since its public listing. Jet reported a loss of Rs 15.2 billion and Spice Jet of Rs 3.9 billion.

Airlines in India complain they pay one of the highest prices for jet fuel across the world due to heavy taxes. Efforts to bring jet fuel under the unified goods and services tax have been unsuccessful, with state governments opposed due to likely loss of revenue.