OMCs want airlines to pay interest on outstanding bills

Mumbai: State-owned oil marketing companies (OMCs) have asked airlines to cough up interest on their outstanding payments.
The marketing companies have written letters to the carriers on the issue and have been urging the petroleum ministry to take up the matter with the civil aviation ministry.
Confirming the move, an Indian Oil director said, “Airlines have been paying us their principal outstanding. However, they have refused to pay any interest on the arrears. This is not acceptable to us. We cannot let them fly at our cost. We have written to them to pay the interest.” The airline industry’s total arrears to OMCs, on account of jet fuel, stand at Rs 3,000 crore.
However, airlines do not see any merit in the demand of the OMCs. They said the government bailout package, which permitted the airlines to clear off their dues to OMCs in six monthly instalments, did not have any provision of interest on dues.
“We are in full compliance with the terms of the extended credit period granted by the OMCs for settlement of outstanding dues towards supply of ATF. There is no provision for payment of interest,” a Kingfisher Airlines spokesperson said in an e-mail reply. An e-mail sent to Jet Airways failed to elicit any response.
OMCs feel otherwise. They said airlines were allowed to pay their dues in six instalments but that did not spare them from paying interest on their dues.
18/12/08 Piyush Pandey/Economic Times

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Categories: Indian Aviation- In General Dec 2008