Airlines lobbying for $2 billion fund, temporary cut in fees

Mumbai: India’s cash-starved airlines have urged the government to set up a $2 billion (Rs9,760 crore) airline stabilization fund and temporarily slash landing, terminal and navigation charges by half.
The Federation of Indian Airlines (FIA), an industry lobby, said in a representation last week to the civil aviation ministry that domestic airlines must be allowed to avail three-five year interest-free loans from the fund based on their number of seats deployed.
The need for such a package, it said, was justified because of the “exceptional circumstances caused by external factors”.
Industry experts have projected India’s airlines to make a combined loss of $2 billion in the fiscal year ending March, weighed by intense competition, high jet fuel costs and the decline in the passenger traffic as a result of the economic slowdown. “This is a practice used in the past by different countries in exceptional cases,” FIA said in its draft paper to the government titled Restructuring and support package for Indian aviation. “An example is the Air Transportation Safety and Systems Stabilization Act implemented in September 2001 by USA.”
Under the US’ stabilization Act, airlines were given access to Federal credit instruments worth a total $10 billion, in addition to a $5 billion compensation to cover direct losses from the terror attacks of 11 September 2001 in New York.
06/02/09 P.R. Sanjai/Livemint

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Categories: Indian Aviation- In General Feb 2009