PM to meet airlines chiefs Saturday

November 25th, 2011 - 3:58 pm ICT by IANS  

Manmohan Singh New Delhi, Nov 25 (IANS) In an attempt to chart a way out for the cash-strapped Indian aviation industry, Prime Minister Manmohan Singh will meet with the heads of all Indian airlines Saturday.

“The PM is concerned… It’s the major institution of connectivity, supporting the development of the country,” Civil Aviation Minister Vayalar Ravi told reporters outside parliament.

Manmohan Singh had said Nov 12: “A private airline has to be managed efficiently, but if there are difficulties, we have to find ways and means to help them.”

Ravi declined to say if the government was contemplating any special package for the ailing airline industry.

Three major airlines, including Kingfisher, Jet and SpiceJet, have reported heavy second quarter losses.

Kingfisher Airlines alone reported a net loss of Rs.468.66 crore, owing to higher fuel costs and low yields.

The company’s net loss stood at Rs.230.81 crore in the corresponding period of the last fiscal.

Jet Airways reported a net loss of Rs.713.60 crore in the second quarter from a net profit of Rs 12.40 crore in the same period of the previous fiscal.

Even budget airline SpiceJet was in loss to the tune of Rs.240 crore for the quarter under review. It had a net profit of Rs.10 crore last year.

Jet fuel prices have increased by 30 percent since December 2010, and the domestic airlines are expected to lose Rs.3,500 crore in the first six months of this fiscal.

On allowing foreign direct investment (FDI) by foreign airlines in domestic carriers, Ravi said he would not make any statement as parliament was in session.

Earlier, the department of industrial policy and promotion (DIPP) proposed a 26 percent cap FDI intake in the airline sector by foreign carriers.

“Private airlines in the country are in need of funds for operations and service upgradation to compete with other global carriers,” the DIPP note said.

Currently, the government allows for an FDI intake of 49 percent in Indian carriers by non-airline players but bans foreign airlines from directly investing due to security reasons.

Industry sources say the fresh infusion of investment would give a lifeline to the struggling sector, which bears the brunt of high jet fuel prices caused by state levies and high interest cost of their debt.

“Current financial position of Indian carriers is extremely challenging. FDI by global airlines in India would be a very welcome step,” said Amber Dubey, director, aviation for consultancy firm KPMG.

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