On the anvil: A comprehensive aviation policy

New Delhi: Twenty years after India opened its skies to private airlines, a comprehensive policy for the civil aviation sector is on cards. Though the government routinely bails out state-owned Air India, which is in dire straits, it can’t do the same for troubled private airlines that are bruised in a price war amid soaring fuel costs. With leading private airlines recording losses in the April-June quarter, the government feels it is time to take action.
Sources in the government said that while Air India is bogged down by financial woes, private airlines aren’t much better either. As its owner, the government can support Air India with cash, but is helpless if private airlines start collapsing.
Kingfisher Airlines ended last fiscal with a R1,027-crore loss. Even after a debt restructuring in which some lenders converted part of their loans into equity, the airline still owes over R6,000 crore to its lenders. It has delayed or defaulted on some payments to suppliers.
The government is planning to set up a panel of ministers or secretaries to find how a fund to support the aviation industry in times of crisis can be formed.
“One of the options could be to levy some kind of a cess on passengers to create the fund,” an official involved in the discussions told FE. “It was realised by the government at the highest level that the country has no comprehensive civil aviation policy. All we have is an open skies policy, which barely caps foreign investment at 49%,” the official added.
15/08/11 Rishi Raj/Nistula Hebbar

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Categories: Indian Aviation- In General Aug 2011