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Air India expected to suffer Rs 5,000 crores loss

india Updated: Jul 14, 2009 16:53 IST

Government on Tuesday said that national carrier Air India is estimated to suffer a loss of around Rs 5,000 crores in 2008-09 due to operating losses, high oil prices and debt servicing.

"National Aviation Company India Ltd (NACIL) expects to register a loss of approximately Rs 5000 crores in 2008-09, Minister of State for Civil Aviation Praful Patel said in a written reply to a question in Rajya Sabha.

The losses have been largely due to operating losses, which have been compounded due to the present economic recession and also the high oil prices last year and debt servicing on new aircraft," he said.

The minister said NACIL has initiated steps like integration and restructuring of network and schedules, fuel efficiency improvement measures and extended credit period for all vendors.

It has also put on hold promotions and recruitments. The staff has been asked to travel only economy class apart from measures for restructuring of loans and credits, the minister said.

In reply to another question, Patel said that Air India did not raise its fares in the recent past to remain competitive during the economic meltdown, but was compelled to increase domestic fuel surcharge by Rs 400 in view of the increase in prices of ATF.

The minister listed steps like abolition of custom duty on import of ATF, reduction in sales tax on ATF by state governments, announcement of ATF prices on a fortnightly basis by the oil companies, to tide over the crisis.

Patel said after a presentation was made to the prime minister on the difficulties being faced by the airline, a committee under the chairmanship of the Cabinet Secretary has been constituted to monitor the various steps suggested.

On the international sectors, Air India's market share declined from 21.7 per cent in 2007-08 to 17.7 per cent in 2008-09, with a capacity drop of 6 per cent.

On the domestic sectors, Air India's market share declined from 17.9 per cent in 2007-08 to 16.9 per cent in 2008-09, with a capacity drop of 10 per cent as against the overall industry drop of 2.2 per cent.

"The drop in market share is directly related to the reduced capacity deployed by Air India on account of restructuring of its operations," he said.

In reply to another question on the deferring of the payment of employees' salary, Patel said these are being paid between the 10th and 14th July, depending upon the category of employees.

The minister also informed the House that Jet Airways, Jet Lite, Kingfisher Airline, Spicejet, Go Air, Paramount Airways and IndiGo have increased the fuel surcharges by Rs 400 across their network effective June 16.

He, however, ruled out any proposal for subsidising Aviation Turbine Fuel.