Bailout for pvt airlines bad policy, fears govt

Well-placed sources said the government believed that bailouts for the private sector airline industry would raise some policy issues.
Already, two major airlines, Jet and Kingfisher owe Rs 2,024 crore to the state oil marketing firms. And if a package were to be prepared for the aviation sector, demands by other segments could scarcely be ignored.
At a time when the government is trying to encourage state-run enterprises to become more competitive, it’s felt that a bailout for the private sector would be bad policy.
Furthermore, the assistance offered to the banking system so far has been by way of increased money supply, easing of credit norms and special windows for borrowing at reduced rates—none of these measures, it was pointed out, constituted a bailout.
Some adjustments in terms of duty cuts or deferred payments may perhaps be possible, sources indicated, but no wholesale rescue operation is on the cards.
Briefing the media after Thursday’s cabinet meeting, science and technology minister Kapil Sibal said, "There is no responsibility of the government in this case (sacking of Jet employees). Our responsibility is only to ensure that the economy is functioning well."
There is also a view that the woes of the major civil aviation players could not be entirely blamed on the sharp downturn in demand. There had been warning signals for some time now and even IATA had warned that the Indian airline industry would be the second-most affected after the US.
17/10/08 Economic Times

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Categories: Indian Aviation- In General Oct 2008