India may consider lowering taxes and operating charges to assist airlines hurt by higher fuel costs and record losses.
The government may ask banks to facilitate working capital for carriers and tell state-owned oil companies to delay seeking payment on jet-fuel purchases, Civil Aviation Minister Praful Patel said today in Hyderabad. Jet fuel prices in India is among the world’s most expensive, according to the International Air Transport Association.
“It’s difficult for the government to write a cheque, but we can consider giving other assistance,” Patel told reporters. “The government has set up a committee to look into the problems of the industry and find ways and means to restore the financial health of the sector.”
India’s carriers have complained to the government that banks are “unhappy” to lend to them, Patel told an aviation conference today. Banks worldwide have curbed lending because of increased concerns about getting their money back following the collapse of a US bank and the start of a wider economic slowdown. Higher fuel prices, overcapacity and slowing demand will push the nation’s aviation industry to a record $2 billion loss this year, the Centre for Asia Pacific Aviation has forecast. The loss is more than double that of last year.
A kilolitre of jet fuel cost 73,600 rupees ($1,600) in Mumbai compared with the around 46,500 rupees in Singapore, IATA said last month.
National Aviation Co of India Ltd, which owns the carrier, is estimated to have had a loss of about Rs 2,000 crore in the year ended March 31, its chairman Raghu Menon said on August 21. The government has further deferred a plan to sell its stake in the airline, Patel said.