Govt considering special package for airline industry: report

18 Dec 2014


The civil aviation ministry is considering a special package for airlines in the backdrop of SpiceJet Ltd, India's second-largest low-fare airline, grounding its fleet briefly on Wednesday owing to a cash crisis, a year after Kingfisher Airlines ran aground in October last year.

Reports quoting unconfirmed sources in the aviation ministry said the government is considering special package for airlines, which may include granting infrastructure status to airlines and dealing with the issue of high-cost jet fuel.

''We are preparing special relief measures for Indian airline companies, including granting infrastructure status. The said package is not restricted to SpiceJet. We are talking to finance ministry to finalise the plan,'' Livemint quoted a ministry official as saying.

The ministry will also take up the issue of high-cost jet fuel as that alone accounts for 50 per cent of expenses for Indian airlines.

''Certainly, the SpiceJet crisis has triggered this proposal, but the package would not be specific to SpiceJet. There is a series of proposals that should make life of Indian airlines better,'' the report quoted an official as saying.

The ministry plans to take up the proposals after the current Parliament session.

In the interim, the aviation ministry has permitted SpiceJet to accept bookings till March-end and has asked banks to provide working capital loans worth Rs600 crore. It has also requested state-owned oil companies to extend a credit line for jet fuel for two more weeks.

''The public sector oil companies would be requested to give credit for up to 15 days,'' the ministry of civil aviation said in a statement on Tuesday.

The airline on an average buys fuel worth Rs5 crore daily and a 15-day off-take would cost about Rs75 crore. Against this, SpiceJet's pending dues to oil companies are worth Rs14 crore as of 15 December 2014.  

Further, the ministry has asked airport operators to wait for two more weeks for the company to pay them their dues and would also request the ministry of finance to permit the airline to borrow overseas for working capital as a special case.

Infrastructure status would help airlines access credit at cheaper rates while a reduction in the price of jet fuel would help them get out of the cash crunch and even make a profit.

SpiceJet, which had to cancel more than half of its daily flights on Wednesday, said all of its 230 flights scheduled to operate today are flying normally.

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