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Oct  2008

Indian carriers can defer fuel payments: Praful Patel

     New Delhi: Civil Aviation Minister Praful Patel today said that India's airline companies are to repay upto 28 billion rupees outstanding aviation fuel dues to state-run refineries by March 2009 in six monthly installments. Talking to reporters after meeting with Petroleum and Natural Gas Minister Murli Deora, Patel said that oil firms have agreed to raise the credit period for local carriers to 90 days from 60 days, and refineries would revise jet fuel prices every 15 days instead of 30 days. "Cumulatively all the oil companies have an outstanding towards all the airlines of close to about 2500-2800 crores depending on the latest figures. The airlines in view of the difficulties have expressed that this outstanding shall be cleared by them in six monthly installments," he added.

     Patel said that the industry is lobbying hard to pressurize the government to reduce the Aviation Turbine Fuel (ATF). Patel said he has been urging the Gvernment to reduce taxes on ATF. "I have conveyed it to the finance ministry, I have met Chidambaram and we have had a word about the taxes imposed on the aviation sector. The ATF is high and is imposed by the states also apart from what the centre imposes. It is high time that we reduce the tax and rationalize it. This demand is not new, I myself have been pressing for it for four years now," said Patel. Shares of the top carrier Jet Airways rose 2.7 percent to 235 rupees, while the Kingfisher Airlines climbed 3.5 percent to 42.5 rupees after the minister's comments. But state-run oil firms such as the Indian Oil Corp, the Bharat Petroleum Corp and the Hindustan Petroleum Corp were down 2-7 percent. The Indian aviation industry, which has combined revenue of six billion dollars, is expected to lose two billion dollars in the current financial year. After witnessing second fastest growth in the civil aviation world, the Indian aviation industry has hit a huge air pocket and is going through turbulence. By 2008, the industry had 20-25 per cent excess capacity that too concentrated mainly on trunk routes. Most of the airlines were recovering only 60 per cent of the actual cost of flying each passenger, which further got aggravated due to sharp hike in fuel prices.
-Oct 22, 2008