Airlines Body To Meet Rbi On Funding

A team comprising representatives of the Federation of Indian and Foreign Airlines and Air Taxi Operators, (FIFA-ATO) and banks will be meeting the Reserve Bank of India, shortly to outline norms for aircraft financing in the country.

This follows a separate meeting between the domestic aviation industry and bankers with the civil aviation ministry last month, and the ministrys decision to try and formulate certain financing norms to help the domestic aviation industry.

In a meeting yesterday, State Bank of India, Bank of Baroda, ANZ Grindlays and ABN Amro representatives, besides others, met members from FIFA-ATO to discuss the concessions that could be given while financing aircraft purchases by the industry. The private operators were represented by Gujarat Airways, Span Airways, and NEPC Airlines among others.

 

The industry felt that the banks should look at a concessional interest rates while lending to the aviation sector. The industry also felt that there should be a moratorium on any payment for a period of two years, 100 per cent financing for new aircraft, and bank financing for second hand aircraft.

The industry also felt that a separate criterion should be evolved by banks for loans to be disbursed to the aviation industry.

The banking fraternity, however, is of the opinion that there could not be a separate criterion for loans to the aviation industry and financing would be done on the basis of the established industry norms, sources said.

The banks also pointed out that internationally there is no such two moratorium as is being mooted by the industry, a source said. Bankers, on their part, pointed out that they too were in the business to make a profit, the source said.

The meeting also sought to establish the reasons behind the closure and financial woes of ModiLuft and East West Airlines, the source said.

It may be mentioned that the recently formulated civil aviation policy has barred foreign airlines from holding an equity in a domestic venture.

The policy besides scuttling the Tata-Singapore Airlines plan for a domestic airline had also jeopardised the 40 per cent held by Kuwait and Gulf Airlines in Jet Airways.

The domestic aviation industry has been witnessing turbulent times, first with the fall of the high profile Damania Airlines, and the subsequent closure of ModiLuft and East West Airlines.

The domestic airlines do not have the funds to outline a long term growth policy involving the acquisition of new aircraft, and the growth in the sector too has not actually been spectacular, an industry source said.