Private airlines in India will not fly on August 18. Weighed down by losses of Rs 10,000 crore last year and with no silver lining on the horizon, all but one of India’s seven private airline companies have decided to go on strike.
The message was clear: help us lower our operations costs or face the consequences.
<b1>This is the first time that almost the entire sector is taking such concerted action on an issue affecting their survival. National carrier Air India and the business class-only Param-ount Airways are the only ones staying away from the strike.
The airlines will refund money to all those who have bought tickets for August 18.
Reacting to this threat, Civil Aviation Minister Praful Patel said: “The government does not support any move that will inconvenience the public. We advise airlines to engage in a dialogue with the government.”
“You must understand this (aviation) business is becoming unviable as we’re being taxed to death,” Kingfisher chairman Vijay Mallya told CNN-IBN.
Aviation turbine fuel (ATF or jet fuel) prices in India are 60 per cent higher than global prices. Fuel accounts for 40 per cent of any airlines’ operating costs.
“The issue of tax on ATF (which raises its price) is a state issue and the Aviation Ministry has been requesting the them to see reason for the last few years,” said Patel.
Then, other operating costs, like landing and parking charges are about 10 per cent higher in India than elsewhere in the world, and the airport development charge levied by private airport developers also adds to costs.
The airlines, however, refused to accept that it was a strike. “You may use whatever word you want,” Kingfisher chairman Vijay Mallya said on Friday, “but this is not a strike”.
“It is a well-considered decision of all members not to fly on August 18,” said Anil Baijal, secretary general, Federation of Indian Airlines, the apex body of airlines in the country.
Naresh Goyal, Chairman, Jet Airways, sounded more conciliatory: “It (airlines’ losses) is a serious problem. We are all listed companies. We have shareholders. There are others involved… We are positive that the government will consider our request.”
Kingfisher and Jet Airways, which also operate international flights, announced that these would not be affected. “We do not have to pay the high taxes on ATF when flying abroad,” Mallya said.
There could be another reason as well. Strong consumer laws in the US and Europe could result in these airlines having to pay hefty damages to passengers inconvenienced by cancelled flights and consequent business and other losses.