Oil companies resumed supply of jet fuel to national carrier Air India on Friday after huge unpaid bills led to the cancellation of four flights earlier in the day.
"We have reached an understanding on the issue. We would be paying for our jet fuel requirements and also expect further relief from the ministry of civil aviation in this regard," senior Air India operations official said.
According to the Mumbai-based official, the understanding on fuel supply was reached after senior officials from Air India and oil marketing companies discussed the issue, which had till afternoon grounded four domestic and international flights.
"High-level parleys were conducted between two-sides to reach the understanding," the official said.
Earlier, the flag carrier was placed on a cash-and-carry basis by the three state-owned oil marketing companies, including Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL), for the unpaid fuel dues.
"We have placed Air India on cash-and-carry basis. They would now pay us every time they buy jet fuel from any of the three companies," senior official with a public sector oil firm said.
Currently, the airline has a consolidated fuel debt worth Rs.2,000 crore to the three oil firms.
Air India confirmed that it will be paying the required amount to buy jet fuel from the oil firms.
"We will be paying them for our immediate needs," Air India official said.
However, aviation experts doubt the viability of the airline to operate on such payment schemes as it is already under tremendous financial burden.
The flag carrier has a daily requirement of Rs.16 crore worth of Aviation Turbine Fuel (ATF) of jet propellant-1 (JP-1) type.
Four Air India flights on domestic and international routes were cancelled early on Friday morning as oil firms refused to provide jet fuel and demanded that the carrier pay cash for the ATF.
"Our operations officials were asked to pay there and then. Now paying of such high amount requires senior authorisation, which takes time. That's why the four flights had to be cancelled."
The four cancelled flights were two from Kochi and one each from Thiruvanathapuram (to Chennai) and Kozhikode (Air India Express flight to Muscat).
"Two flights from Kochi - Air India Express flight to Sharjah and a domestic flight to Bangalore - have also been cancelled. But we are able to operate the Riyadh flight from Thiruvananthapuram via Kochi that is carrying 400 passengers," said the Air India official.