Oil PSUs, 2 airports slap notice on Air India | business | Hindustan Times
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Oil PSUs, 2 airports slap notice on Air India

Financial crisis facing already cash-strapped Air India worsened today with oil PSUs restricting the supply of jet fuel and operators of Delhi and Hyderabad airports asking it to pay up the dues by June 1.

business Updated: May 27, 2011 23:19 IST

Financial crisis facing already cash-strapped Air India worsened on Friday with oil PSUs restricting the supply of jet fuel and operators of Delhi and Hyderabad airports asking it to pay up the dues by June 1.

GMR-led Delhi International Airport Limited and Hyderabad International Airport Limited said Air India would be allowed to operate their flights "only on cash and carry basis" from midnight of June 1.

Air India owes Rs 217.08 crore to Delhi airport and Rs 35.89 crore to Hyderabad airport on account on airport handling charges, including aeronautical charges.

Two GMR-led joint ventures also put Kingfisher Airlines on notice saying that the national carrier and the Vijay Mallya-owned airlines had "significant amount of dues" and both of them "will be allowed to operate their flights from and to Delhi and Hyderabad, only on cash and carry basis."

Kingfisher Airlines owes Rs 67.98 crore and Rs 21.98 crore respectively to DIAL and GHIAL.

"It is expected that these airline companies will clear major outstanding payments owed by them to DIAL and GHIAL to avoid inconvenience that might be caused to their passengers with effect from June 1," a GMR spokesperson said.

The spokesperson said DIAL and GHIAL took the decision "after continued deliberations with these airlines failed to yield payments of outstanding dues."

Air India today faced a crisis situation with oil PSUs restricting the supply of jet fuel, forcing the carrier to cancel six flights from Thiruvananthapuram and prepare a contingency plan to combine flights from Saturday.

Three state-owned oil firms slashed the supply of aviation turbine fuel (ATF) to the national carrier by 20% at all airports, leading to the cancellation of six services, including some international ones, official sources said.

Air India's total fuel dues to Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation amount to about Rs 2,400 crore.

As less fuel was supplied at Thiruvananthapuram early on Friday, only four of the ten scheduled flights, including international ones, could take off, the sources said.

With the spectre of fuel restrictions looming, the airline prepared a contingency to manage its schedules from major metro airports from Saturday, AI officials said.

The crew on all international flights have also been asked to buy extra fuel while returning home. The airline operates nearly 320 flights on domestic and international sectors daily.

The move by the oil PSUs was described as "arbitrary and unscientific" by airline officials but the two sides reached an understanding during the day that curtailment in ATF supply would not be imposed on all airports.

However, the cut in ATF supply could be restricted to some metros to give Air India the leeway to combine flights and adjust its loads and the daily schedule, the sources added.