No layoffs in loss making Air India
21 October 2008
Chennai: India's minister for civil aviation, Praful Patel, has said that there would be no retrenchment for employees of the national flag carrier Air India, while adding that the rising price of jet fuel was as the reason the aviation sector was in a bind.
Speaking to the media after the inauguration of the Chennai airport expansion and modernisation project, Patel said that he has ''categorically denied'' talk of retrenchment in Air India. He refused comments on the same being adopted by private sector airlines.
Last week, the country's largest private carrier Jet Airways had fired 1,900 of its employees, only to reinstate them a day later. Kingfisher Airlines too has announced a pay cut for its trainee pilots as part of cost-cutting measures, while opting to dishonour letters of intent issues to other trainee pilots which had promised them jobs as co-pilots with the airline. Jet and Kingfisher have recently effected an alliance which, among other things, will see the two airlines control almost 60 per cent of the domestic aviation market, and implement a code sharing agreement to reduce operations and costs for both airlines.
Patel also said that the prices of aviation turbine fuel need to be rationalised for airlines to manage the present crisis. The increased prices of aviation turbine fuel has saddled airlines with extra costs of around Rs7,000 to Rs8,000 crore. Airlines have had little option but to pass on this cost to passengers through fuel surcharges. Patel said that there was an immediate need for states to reduce sales tax levied on aviation turbine fuel to more rational levels. He said most states levy a sales tax of 29 per cent ''on a commodity whose value has gone up, which also adds up to the overall cost."
Patel also advocated a cut in other taxes, including customs and excise. He said that states need to understand that better rational pricing would bring more flights into their cities, and help increase revenue.
Patel also said that unless a permanent solution was found to the woes of the aviation industry, fears of retrenchment would remain.
The Chennai airport is being expanded and modernised at an estimated cost of around Rs1808 crore.