May ask finance firms to go slow on loans

Civil Aviation Minister Praful Patel today said the ministry was asking finance companies like GE Capital and International Leasing Finance Corporation not to invoke bank guarantees due to payment defaults by Indian carriers.

Patel also plans to meet Finance Minister P Chidambaram on the issue. “I am going to meet Finance Minister P Chidambaram to request the finance ministry to tell the lenders to ease some pressure on the airlines and to encourage further investment in the industry,” said Patel. Many Indian carriers had taken loans from financial institutions to fund their aircraft acquisitions and leases and are now believed to be defaulting on payments.

The lenders are, in turn, putting pressure on the airlines to pay up.

Talking about the alliance between Kingfisher and Jet Airways, Patel said there would be nothing wrong if the alliance was within the framework of the guidelines of the Directorate General of Civil Aviation (DGCA). “It is too premature to take a call on it now. Codeshares are not new to the Indian aviation industry.

But one needs to see what the airlines are proposing through the alliance,” said Patel.

Asked if it might lead to cartelisation in the industry, Patel said, “In the beginning we had only one carrier in the industry. Even now many carriers almost have a monopoly on certain routes.” Talking about Air India, Patel said the government needed to infuse equity worth Rs 1,000-1,500 crore into the national carrier. “The capital base of the airline is absurdly low. Even after this infusion there might be a requirement for extra capital,” he said.