Saturday, April 18, 2020

FICCI seeks government support for aviation sector

Amidst global financial crisis in the aviation industry, the Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the government to waive off interests and delayed charges and accruals to airport operators along with loan guarantees to the airlines to make up for the gap.

In a communication to Aviation Secretary Pradeep Singh Kharola on Friday, the industrial body claimed that the aviation industry is facing a crisis of unimaginable proportion due to the impact of the COVID-19 pandemic and with prolonged travel restrictions in place around the world, aviation sector will face a massive plunge in cash reserves as fleets remain grounded for almost a month now. Many airline companies are on the brink of bankruptcy and almost 30 lakh jobs are at risk in the Indian aviation-dependent sectors.
"In addition to cutting down flights, airlines are putting aircraft in storage, moving forward fleet retirement dates and deferring delivery of new aircraft. What the Indian aviation industry needs to survive is an immediate bailout from the government," said Anand Stanley, Chairman, FICCI, Civil Aviation Committee.

India’s aviation industry is expected to post losses of $3-3.6 billion in the June quarter because of COVID-19, with airlines sharing the bulk of the hit. While making recommendations related for fund manage, the FICCI said that the government may immediately give a direction under Section 7(1) of the Reserve Bank of India Act, 1934 (RBI Act) in order to ensure continued provision of air travel services to passengers (which are recognised as essential services under the Essential Services Maintenance Act, 1968) and to ensure the survival of airline operators who are incurring substantial losses on account of the outbreak.

"Therefore, it is recommended that the Government needs to give appropriate directions to the Reserve Bank of India to ensure that the operation of existing stand-by letters of credit/other foreign guarantees and bank guarantees etc. issued by India airlines operators/their banks are suspended with immediate effect for a period of 90 days," FICCI stated in its recommendations. It also urged the government to not remove the grounding until and unless the states also remove their lockdowns, so that people can actually travel. Demand will not return unless lockdowns are fully removed, it observed.
18/04/20 Pradip R Sagar/The Week
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