Financial Revival of Indian Carriers

Financially stressed Indian carriers 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 Ministry of Civil Aviation 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. All member airlines are constantly monitoring their operations and cost control measures. We are sure that given the needed assistance at this time, the sector will be restored to its healthy trajectory,” said its letter to Ministry of Civil Aviation. FIA members together control over 80 per cent of the civil aviation market. In 2009 and 2011, during similar periods of loss, the airlines had asked the government to likewise step in.

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 fierce 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 6.5 billion for the September quarter, its first since its public listing. Jet reported a loss of 15.2 billion and SpiceJet of 3.9 billion. Airlines in India pay one of the highest prices in the world for fuel due to heavy taxes. Efforts to bring jet fuel under GST have not been successful, with state governments opposing the proposal due to apprehension of loss of revenue.