No bailout for private carriers

Action likely if carriers don’t fly on August 18.

The civil aviation ministry has turned down the demand for a bailout made by top private airlines yesterday. Eight carriers had said on Friday that they will suspend operations on August 18 to press their demand, which the ministry appears to be in no mood to accommodate.

“The government cannot be expected to help private airlines financially. The tax on aviation turbine fuel (ATF) has been an issue since much before many of the present airlines came into existence,” said a release put out by the ministry.

In fact, the Directorate General of Civil Aviation (DGCA) has asked the airlines to ensure that passengers get all their money back if they suspend flights on August 18. “If required, DGCA will take appropriate action under its regulatory powers to protect passengers’ interest,” the release said.

“If the airlines do not confirm compliance within 48 hours,they may attract legal action as provided in the Aircraft Act/Rules and relevant regulations,” the release added.

Private carriers, which carry almost 80 per cent of the domestic passenger traffic, claim they have run up losses worth Rs 10,000 crore for 2008-09, thanks to high ATF prices and airport charges as well as the slowdown in business.

Their lobby group, the Federation of Indian Airlines (FIA), has demanded a cut in ATF prices and airport charges to help tide out the situation.

As the government seemed ready for a confrontation, FIA, whose members include Jet Airways, Kingfisher, SpiceJet, GoAir and Indigo Airlines, said it did not want any bailout package.

“It is emphatically denied that member airlines are seeking any charity or bailout from the government. In this difficult operating environment, all that the member airlines have been asking for almost a year now is to create a level-playing field by reducing sales tax on ATF to 4 per cent and operational charges, such as airport, landing, parking and navigation fees, be aligned with global levels,” said a release issued by FIA.

“We are not asking for any bailout. Our demands are rationalization of ATF prices and ground handling charges,” Jet Airways Executive Director Saroj Datta told Business Standard. State-owned Air India is also an FIA member but was not a party to the decision. The airlines have also threatened indefinite suspension of flights if their demands are not met. The decision does not apply to international operations.

Aviation experts said that the government can invoke Essential Services Maintenance Act in case the private airlines decide to carry out their threat. The government can also resort to pressure tactics like cancelling their licences and asking the oil marketing companies and the Airport Authority of India to mount pressure to recover their dues.