IOC gets Rs 2,281 crore as Air India clears 80% of jet fuel dues

State-owned fuel company lists recovery from carrier and increasing air traffic as positives for its business.

The outlook for Indian Oil’s (IOC) aviation business is positive with growth in flights, upcoming launch of new airlines in 2022 and recovery of jet fuel dues from Air India.

“Airline operators have cleared all dues pending with IOC and are now within agreed terms,” the country’s largest fuel retailer said in a statement. “Air India has also paid around 80 per cent of its pending dues to oil marketing companies. IOC has received Rs 2,281 crore from Air India. The balance settlement is under process for which modalities have been initiated in view of the handing over process of Air India.”

Air India has been making daily payments for its fuel uplift but its past dues had been pending for years. In 2019, oil marketing companies had briefly snapped supplies to the airline at six airports. They had restored fuel supply after the airline agreed to pay Rs 100 crore every month to clear the backlog.

Air India cleared 80 per cent of its fuel dues earlier this month upon receiving fund infusion from the government, it is learnt.

IOC said current aviation turbine fuel (ATF) volume has reached 80 per cent of pre-Covid time. “With increasing air traffic, increasing fleet in India, opening of new airports and anticipated entry of upcoming operator Akasa and the revival of Jet Airways, the outlook for aviation business seems to be positive and optimistic,” it said.

According to IOC, recovery of ATF volumes between April to November was 57 per cent of pre-Covid level and is expected to reach pre-Covid levels once international airlines resume normal operations.

Scheduled international passenger flights have been suspended till January 31 in view of the global spread of the Omicron variant of Covid-19. While the civil aviation ministry had given its nod to resume scheduled flights from December 15, the decision was put on hold following a review by Prime Minister Narendra Modi.

Scheduled international flights have been suspended since March 23, 2020, when the lockdown was imposed to rein in the spread of the contagion. While initially only repatriation flights were permitted, India began signing air transport bubble agreements from July 2020 with various countries to resume international flights.

On Sunday, 611 international flights were operated to and from India, which is around 50 per cent of the approved flights in the winter schedule of 2019.