Jun 11 2008
Govt should intervene to save airlines: Praful Patel!
Airline industry, which according to the Civil Aviation Minister Praful Patel is facing a staggering loss of about Rs 4000 crore, is in major crisis after air turbine fuel (ATF) cost has become 50% of the companies cost. Praful Patel seeks the government to save the airline industry from the ongoing crisis.
The minister on Wednesday said he did not want any airline to shut down due to the rise in fuel price. The minister was speaking after meeting with Prime Minister Manmohan Singh to seek a cut in government taxes ATF. In such a situation, the airline companies will be forced to take steps to prune their costs.
He told the PM that government intervention is needed to combat this problem.
On increasing fuel rate, he said that he would be approaching oil companies and the Petroleum Ministry on reducing the base cost of ATF. “We are also looking at reducing route navigation charges,” he added.
Low-cost carrier Spice Jet is expected to make a total loss of Rs 80-100 crore in the current fiscal, up from Rs 70 crore in the last financial year, due to higher ATF price. It is now planning to curtail flights on various routes due to the crisis.
Reacting to the losses that Aviation industry has suffered, Kingfisher Chief Vijay Mallya said, “Heavy losses of the Aviation industry is primarily due to the unprecedented increase in the price of jet oil. To make the matter completely worse, there is a huge element of taxation of government. Meeting with the Prime Minister is to request for tax relief.”
Jeh Wadia, Director of the Wadia group which owns GoAir hopes some tax slash as a solution on the rise in the jet fuel prices and its effect on the rise in the prices of airline tickets.
He said, “We are rationalizing routes and hope for some relief on the sales tax and ultimately we hope that it would be achieved.”
