Dec 142012

The author has posted comments on this articleTNN | Dec 15, 2012, 04.46AM IST

NEW DELHI: Has the only profitable Indian carrier so far – IndiGo – also flown into the red? The aviation ministry told Parliament this week that IndiGo lost Rs 87.6 crore in the fiscal 2011-12, after being constantly profitable in the preceding three financial years.

However, the six-year-old airline firmly contradicted the ministry’s reply and said it was profitable in the fiscal 2011-12 too.

“As a matter of policy, IndiGo does not comment on its profitability. However… stating that IndiGo did not generate profits for fiscal year 2011-2012 is not correct. The airline continues to generate healthy levels of profitability,” a statement issued by IndiGo, the country’s largest airline by domestic market share, said. tnn

The ministry reply, which IndiGo disputes, says the low cost carrier (LCC) in fiscal 2011-12 had operating revenue of Rs 5552.4 crore as against operating expenses of about Rs 5640 crore, leading to the loss of Rs 87.6 crore. In the preceding three fiscals 2008-09, 2009-10 and 2010-11, the ministry said that the airline had made operating profits of Rs 18 crore, Rs 446.7 crore and Rs 602.5 crore, respectively.

While IndiGo’s claim of profitability in 2011-12 may have come under a dispute, what the ministry reply shows is the cost hostile environment airlines face in India due to exceptionally high operating cost here. In the three financial years from 2008-09 to 2010-11, the reply says, airlines collectively lost Rs 14,814.2 crore out of which Air India group’s share was 12,801.3 crore or roughly 86.5%.

These figures would have been much worse as the reply only gave two results for 2011-12: IndiGo’s disputed loss of Rs 87.6 crore and Jet Airway’s operating loss of Rs 654.8 crore. “Financial data for 2011-12 of other airlines is yet to be received,” the statement said.

“Air India and Kingfisher may be suffering from lack of management with the politician-bureaucrat nexus over past decades destroying the former and the latter simply not having the knowhow to run an airline, but even so-called well run airlines are having a tough time trying to survive in India. Jet fuel prices of domestic flights here are among the highest in the world due to a mix of high base price and steep sales tax levied by states on that. Apart from fuel, airport charges in places like Delhi are exorbitant for both airlines and passengers,” said an airline official. India has today become the worst performing domestic aviation market globally with the country recoding steepest fall in flyer numbers.

Dec 112012

The author has posted comments on this articlePTI | Dec 11, 2012, 07.43PM IST
NEW DELHI: National carrier Air India owes over Rs 4,064 crore in outstanding jet fuel (ATF) bill to state-owned oil companies, the largest overdue payment by any domestic carrier.

Of the total outstanding of Rs 4,064.77 crore, a sum of Rs 2,571.73 crore is overdue payment, the Rajya Sabha was informed today. Unlike private airlines, Air India has not provided any security to cover for its outstanding.

Air India, the unprofitable state-owned carrier, owes Rs 2,393.79 crore to Indian Oil Corp (IOC), of which Rs 1,698.79 crore is overdue payment, Minister of State for Petroleum and Natural Gas Panabaaka Lakshmi said in a written reply.

It owes another Rs 636.04 crore to Bharat Petroleum Corp Ltd (BPCL) and Rs 1,034.94 crore to Hindustan Petroleum Corp Ltd (HPCL).

Jet Airways owes Rs 958.46 crore to IOC but of this only Rs 35.46 crore is overdue payment. The rest is under 90-day credit period that oil companies extend to Jet and other airlines including Air India.

Lakshmi said Jet ownes Rs 111 crore to BPCL, of which Rs 30.84 crore is overdue.

Jet has covered its outstanding with IOC with a Rs 923 crore bank security which can be encashed in case of default in payment. The outstanding of BPCL has been covered by a Rs 160 crore security.

Kingfisher ran an outstanding of only Rs 79.74 crore with HPCL. Of this only Rs 14.38 core is overdue. It has given a Rs 15.05 crore bank guarantee plus a Rs 200 crore corporate guarantee to cover for its fuel outstanding, she said.

HPCL has steadily encashed bank guarantees provided by Kingfisher to recover its dues.

Go Airlines had all of its Rs 99.56 crore outstanding with IOC more than covered with a Rs 115 crore bank guarantee. Spice Jet too had its Rs 91.03 crore outstanding covered with a Rs 95 crore bank guarantee.

“In case airlines fail to pay their dues, oil marketing companies take action for recovery of dues in line with the mutually-agreed commercial terms between them and the Airlines,” she said adding the oil firms put defaulters on ‘cash-and-carry’ and recover overdue payment by encashing bank guarantee.

Also, oil firms seek post-dated cheques for outstanding dues and file suit in court against defaulting airlines, she said.