Air India forced to cancel flights as oil firms limit ATF supplies
27 May 2011
The three state-run oil marketing firms have limited supplies of aviation turbine fuel (ATF) to Air India by adopting a strictly cash-and-carry policy, forcing the national carrier to cancel six flights, including some international ones.
The airline has cancelled six flights from Thiruvananthapuram and is reported to be preparing a contingency plan to combine flights from Saturday.
The three oil firms imposed a 20 per cent cut in ATF supplies to Air India, which continued to default on payment of jet fuel bills.
With the national carrier amassing fuel payment dues of over Rs1,900 crore to IOC alone, oil marketing firms have restricted supplies to a strictly-on-cash basis since December 2010. Air India, however, continued to get fuel supplies above its capacity to pay.
Oil companies had, last week, sent a notice for stopping ATF supplies to Air India at some airports like Calicut and Jaipur. They have now adopted a cash-and-carry policy, but have not stopped ATF supplies to Air India at any airport, according to the three oil marketing companies.
Air India, which meets over 60 per cent of Air India's ATF requirements, and the two other state-run oil firms sell fuel worth Rs18.5 crore per day to Air India, but they receive only Rs13.5 crore.
Aior India's current daily requirement of ATF is worth about Rs16 crore.
