The domestic aviation sector in India has suffered a staggering loss of Rs 4,000 crore in the last fiscal, which is threatening to go up to Rs 8,000 in 2008-09 thanks to spiralling aviation turbine fuel (ATF) prices. Airlines are planning to balance the increase in costs by slashing flight capacity by up to 20 per cent, which means flights on less profitable routes would be junked.
In a meeting of civil aviation authorities and airline and airport operators on Wednesday, rising fuel prices dominated most of the discussion, apart from airport levies charged by private airports, new refund policy and other issues. "Oil prices are at all-time high and airline operators are finding it difficult to make both ends meets. There are substantial losses being reported by the airlines in India," Civil Aviation Secretary Ashok Chawla said after the meeting.
Airline representatives said that flight capacity could be cut by up to 20 per cent, which means flights on less profitable routes would be junked. The airlines assured the Ministry that they would do everything to cut operational costs so minimum burden falls on passengers.
The airlines also requested relief at the macro level such as bringing down the levies charged by private airports. Costs have also increased recently as private airports now levy charges on parking, landing, navigation, user development fee etc, some of which were not charged by the Airports Authority of India (AAI) earlier. The AAI said it would not hike its levies, last revised in 2003-04. "Levies by private airports is a normal process of transition from one system to another," Chawla said.
Airlines also demanded rationalisation on sales taxes and other taxes charged by different state governments.
Praful writs to PM
In a letter to Manmohan Singh, Civil Aviation Minister Praful Patel has requested the Prime Minister to help save the aviation sector from ‘sickness’ caused by ever-rising ATF prices.
Patel is going to submit a presentation to Singh and Finance Minister P. Chidambaram about the financial difficulties of domestic airlines due to spiralling fuel costs, which constitute about 50 per cent of their total operational expenditure.