Costlier fuel: airlines may pare jobs, routes

Mumbai: Airline companies in India, reeling under losses projected to top $2 billion (Rs8,520 crore) this financial year if the current record oil prices hold or continue to rise, have signalled that cost-cutting measures such as layoffs and pulling back on flight routes to states that levy high sales tax on aviation fuel are on the anvil.
Senior executives at the airlines, who met Union civil aviation secretary Ashok Chawla on Wednesday, lobbied the government to allow subsidies for the fuel—also known as ATF, or aviation turbine fuel —in line with subsidies on fuel used by trains and motor vehicles.
India controls prices at which diesel, petrol and other petroleum products are sold.
ATF, which used to constitute around 40% of the operating cost for airlines, now accounts for up to 60% after prices of the fuel tripled in the last three years. The fuel today sells at Rs71,759 per kl in Mumbai, some 19% more than the previous month’s price, and Rs69,227.08 for the same volume, up 18.56% from May.
Burdened with high ATF costs, airlines have not just started cutting down their route expansion plans but are also cancelling flights on certain low-traffic routes. They will now begin pulling back on routes where operating costs are high because sales tax on ATF in some states is as high as 30%, three executives from three airlines confirmed to Mint on the condition of anonymity.
05/06/08 P.R. Sanjai/Livemint

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Jun 2008