Govt rules out airline bailout

New Delhi: The Congress-led government is unwilling to provide any more bailout packages to private airlines because they can easily raise cheap loans to tackle their cash-flow problem.
“Air India is a special case. The government owns it and is already committed to infusing equity in that airline. We cannot give any more to private airlines,” said top civil aviation officials.
Earlier, the government had allowed airlines, including Kingfisher and Jet Airways, the flexibility to pay their jet fuel dues of over Rs 2,900 crore in six interest-free instalments. This is seen by many as a form of bailout. The government had also stopped giving fresh licences a year back to limit the number of players and reduce competitive pressures on the existing operators.
Civil aviation minister Praful Patel, who is travelling abroad, had earlier said that there “could be no (more) bailout for private airlines. The promoters are big people they should find money for their airlines.”
Justifying a revival package for Air India, the officials said the national carrier operated on many uneconomic routes such as those in the Northeast and Kashmir. Besides, it had to often fly abroad on national duty.
“We cannot compare a bailout for Air India which has served national interests at the cost of its own economics with a package for private airlines who threaten to stop flying if they do not get help,” they said.
Finance ministry officials, however, said they had long proposed declared-goods status for jet fuel, which could help to reduce the value-added tax on it from as high as 29 per cent in some states to just 4 per cent across the country. Andhra Pradesh has the lowest tax at 4 per cent, while Tamil Nadu and Bihar have the highest at 29 per cent. Bengal charges 25 per cent.
31/07/09 The Telegraph

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

Categories: NACIL Aug 2009