Pvt airlines threaten strike on Aug 18; demand bailout

Last Updated: Saturday, August 1, 2009 - 11:56

Zeenews Bureau

New Delhi: Desperate for funds, major Indian private airlines have threatened to strike work if the government does not provide them a bailout in the form of measures like ATF tax cut etc.

In a press conference organised by Federation of Indian Aviation, the private owners like Jet Airway’s Naresh Goyal, Kingfisher’s Vijay Mallya expressed their disillusionment with the Government in not extending help to the grieving sector.

The decision was taken at a meeting of the Federation of Indian Airlines (FIA), a representative body of private carriers, to discuss the current situation in the country`s aviation sector and the way forward.

“We have decided to halt countrywide operations on August 18 to highlight the urgency of the matter and the need for government intervention,” Anil Baijal, the FIA secretary announced.

He said that member airlines had accumulated losses worth a whopping $2 billion, and unless the government initiates action to help them overcome the crisis they will not be able to sustain operations any further.

The decision was taken jointly by Kingfisher Airlines,
Kingfisher Red, Jet Airways, JetLite, Jet Konnect, IndiGo and
SpiceJet, which have accumulated losses of Rs 2,444 crore in
2007-08 and feared to sustain losses of over Rs 10,000 crore
in 2008-09.

Ironically, the decision was taken at a meeting of
their umbrella body Federation of Indian Airlines (FIA) on a
day when oil companies raised the aviation turbine fuel prices
by Rs 620 per kilolitre from tonight.

“We can not afford to sustain losses. This year alone we have combined losses to the tune of Rs 57000cr,” Mallya said.

He announced that the private carriers will not operate on August 18 and those who have booked their tickets will be refunded. He however said that international operations will not be affected as they do not suffer financially as much the Indian ones do.

Naresh Goyal said it was not a threat but a request.

“It is not that the govt does not know about our plight. I am positive we will not have to stop operations on August 18 and something will work out,” he said.

"We are bleeding. Everybody is bleeding. Giving a helping hand to the airline industry is done all over the world,"he added.

Mallya however said the government could take it as a threat if they wanted to but they had a right to report their grievances.

Asserting that they have a right to be heard, Mallya
said "we are being taxed to death. We are not asking a bailout
package but punitive sales tax on jet fuel and high airport
charges should be taken care of."

The private carriers said that they may have to suspend operations indefinitely if the current situation continued. “We want the government and the nation to know what may happen if the airlines don’t operate,” Mallya said.

Reacting to the airlines` move, Civil Aviation Minister Praful Patel said national carrier Air India would launch additional services Aug 8 if the private carriers go on strike.

"We will mount additional services on August 18 so as to reduce any inconvenience to the public," the minister said in a statement.

Among the various demands from the federation are: Direction to oil retailers to sell aviation fuel cheaper and reduction in airport charges, which they say has ballooned ever since the entry of private players.

"Aviation fuel is among the highest in the world," said Baijal, adding this expenditure alone added 30-40 percent of an airline`s operational costs.

The federation secretary general also said member carriers were already burdened by a low fares and a sharp dip in passenger traffic, and that in such difficult times, they were naturally looking for help from the government.

"This is a well considered decision of private carriers," added Baijal.

He said the carriers would take whatever logistical action was needed as the result of suspension of operations, like refund of money for tickets already booked.

Thus far, the civil aviation ministry has ruled out any bailout package for the aviation industry, even though moves are afoot to help the national carrier tide over one of its worst crises.

"Aviation fuel prices are among the highest in the world," said Baijal, adding this expenditure alone comprises 30-40 percent of an airline`s operational costs. These airlines owe nearly $500 million towards fuel to oil companies.

In addition, the economic meltdown has impacted
passenger traffic adversely to a large extent, compounded
further by the tourist arrivals following Mumbai attacks.

All these issues have been taken up with various
ministries of the government but "without any success", the
FIA said.

"This is a well considered decision of private carriers," added Baijal.

Thus far, the civil aviation ministry has ruled out any bailout package for the aviation industry, even though moves are afoot to help the national carrier tide over one of its worst crises.

The opposition parties, including the Left front and the Bharatiya Janata Party (BJP) have also said that a bailout package from the government would not be desirable.

AI not participating

National carrier Air India today
said it is not part of the "boycott" decision of the private
airlines not to fly on Aug 18.

"Air India is not party to the boycott decision. The
matter was not dicussed in the FIA meeting so long as the Air
India Chairman was present.

The decision was taken subsequent
to his departure," an Air India spokesperson said.



First Published: Saturday, August 1, 2009 - 11:56

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