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Indian Airline Industry


India considering bailout for its troubled airlines

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India considering bailout for its troubled airlines
Image via lowest-airfare.co.in

Feb 20, 2012

NEW DELHI, India - With all scheduled airlines, except low-cost carrier (LCC) IndiGo, deep in red, the government is planning to work out a package for this ailing sector. The aviation ministry recently asked all airlines to submit their financial position on issues like debt and working capital requirements . A panel led by aviation secretary Nasim Zaidi - 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 (AI), Jet group, Kingfisher , SpiceJet and GoAir are learnt to have submitted their financial details to the government . Despite being the fastest-growing domestic aviation market globally, Indian carriers are making huge losses due to factors like high sales tax levied by states on jet fuel and high airport charges. The accumulated losses and debts of big players like Jet group, AI, Kingfisher and SpiceJet were Rs 1.18 lakh crore on September 30, 2011.

According to the Centre for Asia Pacific Aviation (CAPA), the three big boys' (Jet, AI and Kingfisher) 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 debtfree 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. Unlike AI, which the government owns and would infuse equity into, the state would have to undertake structural reforms for the sector as a whole so that private players also get a healthy environment without any direct infusion of funds. 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.

Hope In The Air

Aviation ministry recently asked all airlines to submit their financial details on issues like debt and working capital requirements According to CAPA, Jet, AI and Kingfisher's accumulated debt and losses stood at 1.1 lakh crore on September 30, 2011. AI leads the pack with 79,000 crore, followed by Jet group's 18,532 crore and Kingfisher's 13,625 crore Accumulated airline losses till September 30 were 38,000 crore. Bank loans amount to 70,000 crore and 10,000 crore owed to vendors by the full-service carriers, estimates CAPA.

Source: indiatimes.com




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