Govt foots VVIP flight bill, pays AI Rs 250 cr

The Union government has paid Air India Rs 250 crore for using its aircraft for VVIP charters and evacuation flights. The amount, which was due since 2008, was released on Friday.

Air India is facing a severe cash crunch and is being forced to cancel and combine domestic and international flights, after oil companies had refused to give it additional credit last month. The carrier has agreed to clear the dues of GMR-run Delhi and Hyderabad airports after it was warned it would lose its credit facilities and would have to follow a cash-and-carry mode.

Air India staff has not received its salary for May and allowances for the last two months. "We hope to receive our salaries now,'' said an Air India official.

The government owed Rs 323 crore to Air India for VVIP charters and evacuation flights, and the remaining amount would be cleared soon, said a government official. Air India has demanded that the government clear Rs 800-crore dues towards staff costs and the maintenance of Boeing 747-400 aircraft, which are used for VVIP flights, a demand the government is yet to agree to. The airline says since these aircraft are largely used for VVIP flights, the government must bear the cost.

Air India has four 747-400 aircraft. For the VVIP flights, two of these planes are pulled out from regular operations. Usually, Boeing 747-400 aircraft are flown only on the Riyadh and Jeddah routes.

The government's decision to release Rs 250 crore follows its plan to evacuate over 11,000 people stranded in Yemen. Last week, the government had asked the carrier to be ready for possible evacuation flights. Air India's management took a tough stance, saying the government should pay up before ordering the airline to carry out evacuation flights.

The national carrier has debts amounting to Rs 40,000 crore. Of this sum, Rs 18,000 crore account for short-term working capital loans, which carry an interest rate of 12-14 per cent, while the rest are long-term aircraft acquisition loans.