Centre weighs relief package for airlines to stabilise cash flows
nNEW DELHI: The Union government is considering a relief package for airlines to help tide over a squeeze in cash flows and severe business disruptions caused by the Covid-19 pandemic, said a person familiar with the development, requesting anonymity.
The steps being considered include staggered payments for jet fuel to state-run oil marketing companies, as well as for parking and other charges at airports. “The government is looking into it,” he said, adding the relief measures could be announced soon.
State-run Airports Authority of India (AAI) manages 137 airports, while those in Delhi, Mumbai, Bengaluru and Hyderabad are run by private consortiums, wherein AAI is a stakeholder. Airlines pay charges for landing, parking and navigation services to airports.
In its FY19 annual report, India’s largest airline Indigo had said that ‘increasing cost of airport landing and departures’ is a risk factor for the airline industry, which might adversely hit operations.
On Thursday, Indigo announced a pay cut to a section of its staff to contain costs amid flight suspensions and curbs on operations. An executive with a state-run fuel retailer said the retailers have individual contracts with airlines for fuel payments.
Industry experts said a relief measure from the government will be of great help to the aviation industry, which has been reeling under economic headwinds. “Airlines have to meet certain fixed costs irrespective of their volume of business. Adverse cash flow conditions could lead them to default on these payments. Any relief from the government like moratorium on certain payments would help the airline industry tide over this crisis,” said Kinjal Shah, vice-president, Icra.
Flexibility in payments could help airlines manage cash flow problems at a time when countries across the world are closing their borders and placing embargoes on international flights from regions seen as hotbeds of the infection.
India, for instance, on Thursday, banned all commercial international flights to and from the country for a week starting March 22. The government also advised its citizens to avoid all non-essential travel and banned passengers from certain Covid19-affected nations.
Aviation consultancy Capa India has warned that most global airlines will be bankrupt by the end of May due to the pandemic and only coordinated government and industry action can avoid the catastrophe.
The relief package for the aviation sector is expected to be supplemented by steps for other sectors of the economy. News reports said the government was also looking at a package for daily wage earners, seen as a section majorly affected by the shuttering of small businesses due to the fast-spreading disease.
Cases of Covid-19 infection are inching towards 220,000, globally, affecting 159 countries and resulting in over 9,000 deaths. In India, 173 positive cases and four fatalities have been reported so far.