Monday, April 06, 2020

Airline Companies want Government to invoke ‘force majeure’ due to COVID-19

The outbreak of pandemic COVID-19 has reignited the debate of term ‘force majeure’ in contractual businesses particularly in civil aviation business. The outbreak has brought the world to a near standstill and as a result the commercial businesses are at their low. The companies across the world want the governments or the other businesses to invoke the clause of force majeure so as to save them from incurring losses and their collapse in these unforeseen circumstances.

One of the major industry suffering in India from this pandemic is the airline industry. It is already suffering from low availability of credit to maintain their day to day operation and has been plagued by rampant corruption. The Federation of Indian Chambers of Commerce and Industry (FICCI) has recommended that the government should mandate that force majeure applies to all civil aviation contracts to save the domestic civil aviation industry from the COVID-19 induced crisis.

The passenger airlines both domestic and international have been put on ground for an indefinite period to contain the spread of novel corona virus. In such an extraordinary situation the airlines are seeking invocation of force majeure by the government to defer the payment of taxes, oil charges, aviation turbine fuel and salary to workers. Most of the airlines capital reserves would be wiped out if the situation persists for more than three months. FICCI also suggested that Oil Marketing Companies may be directed to extend unsecured interest-free credit terms to the aviation sector as the aviation turbine fuel is one of the three major costs for domestic airlines.
06/04/20 India Legal

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