Thursday, March 19, 2020

More Than Bailout, Why Govt Needs to Offer Fuel Tax Lifeline to Save Airlines From Coronavirus Pain

Governments around the world are either already pumping in billions of dollars to keep their respective airlines from collapsing or are in the process of considering mega bailout proposals, as the chaos due to Coronavirus pandemic spreads. Reports suggest India is also thinking about a mega rescue plan to save its airline industry from collapse.

A report by Reuters talks of a $1.6 billion (Rs 12,000 crore) package being drafted by the Indian government. An unnamed official is quoted saying the package could come in the form of waiver of taxes on Aviation Turbine Fuel (ATF) till the threat from COVID-19 recedes.

Indian airlines have followed their global peers in flying near empty aircraft on domestic routes. They have been left with little choice but to suspend a majority of international flights and are now staring at empty coffers as flyers increasingly stay away.

The situation is the same for most airlines across the globe. At least six global airlines have completely suspended operations and some major carriers such as Cathay Pacific, FinnAir and Quantas are operating only about 10% of their schedule. In India, GoAir and now Vistara have suspended all international operations while other airlines have also severely curtailed international flights as the panic over COVID-19 spreads.

As airlines continue to struggle, an unintended casualty of the global health emergency could be the proposed sale of state-owned Air India. The government had issued a preliminary information memorandum (PIM) for divesting almost its entire stake in the airline in January this year.
19/03/20 Sindhu Bhattacharya/
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