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Home / News / Business News / Indian airlines can meet just 3 weeks' expenses; needs govt-help
  • Business

    Indian airlines can meet just 3 weeks' expenses; needs govt-help

    Shiladitya Ray
    Written by
    Shiladitya Ray
    Mail
    Last updated on Nov 21, 2018, 02:10 pm
    Indian airlines can meet just 3 weeks' expenses; needs govt-help
  • Amid rising fuel prices and the weakening rupee, airlines in India are having a hard time staying afloat, and have asked the government to help them get unsecured credit from oil companies and airports.

    Earlier, during similar periods of loss in 2009 and 2011, airlines had asked the government to intervene in a similar fashion.

    Here are the details.

  • In this article
    What airlines have asked the government to do An excerpt from the FIA's letter Indian airlines have money to cover expenses for 2-3 weeks Why Indian airlines are in this situation Airlines cannot hike fares owing to competition
  • Request

    What airlines have asked the government to do

    What airlines have asked the government to do
  • In a recent letter to the Ministry of Civil Aviation, the Federation of Indian Airlines (FIA) asked the government to help them secure a month's extra, and unsecured credit from oil-marketing companies.

    Further, they asked that penalties for late payment be waived.

    The FIA consists of Jet Airways, IndiGo, GoAir, and SpiceJet, and accounts for 80% of India's domestic aviation market.

  • Quote

    An excerpt from the FIA's letter

  • "We request (this) to tide over these tough times and with a commitment from member airlines to make staggered payments over the next few months," reads the FIA's letter, addressed to Aviation Secretary Rajiv Narayan Choubey.

  • Situation

    Indian airlines have money to cover expenses for 2-3 weeks

    Indian airlines have money to cover expenses for 2-3 weeks
  • The request comes at a time when losses of Indian carriers is set to balloon to $1.9bn by March 2019.

    Further, according to Sydney-based consulting group, CAPA Centre for Aviation, Indian airlines have cash balances to cover only two to three weeks of expenses, and need to raise $3bn of working capital in the near-term to stay afloat.

  • Factors

    Why Indian airlines are in this situation

    Why Indian airlines are in this situation
  • The dire situation faced by most Indian airlines is resultant of increasing fuel prices, the weakening rupee, and competition in the sector resultant of unprecedented growth in passenger numbers.

    Indian airlines pay some of the highest jet fuel prices in the world owing to heavy taxes, and the situation has been made worse by the rupee's fall, which has, so far, declined 11% against the dollar this year.

  • Competition

    Airlines cannot hike fares owing to competition

    Airlines cannot hike fares owing to competition
  • Adding to their woes is competition in the sector.

    Owing to an unprecedented number of Indians taking to the skies, competition among carriers and aggressive pricing have kept fares low, despite rises in input costs.

    According to CRISIL, Indian airlines are required to raise fares by at least 12% to offset the losses resulting out of increasing fuel prices and the weakening rupee.

    However, such a hike could see many seats go empty.

  • India
  • Jet Airways
  • IndiGo
  • SpiceJet
  • CRISIL
  •  
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