The Hindu Business Line : Domestic airlines may curtail services

“If the Government is unable to provide adequate relief, then we will have no option but to review our flight schedules; and connectivity will suffer.” – Mr Vijay Mallya

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Mumbai, June 14 The domestic airline industry said it would be forced to curtail its services if it did not get adequate relief from the Government on the taxes levied on aviation turbine fuel (ATF).

Emerging from a Federation of Indian Airlines’ (FIA) meeting here late on Friday, Mr Vijay Mallya, Chairman of the Federation, said: “If the Government, for whatever reason, is unable to provide adequate relief, then we will have no option but to review our flight schedules; and connectivity will suffer.”

Sources in the airline industry indicated that FIA would wait till the end of the month to take a call on which flights to curtail.

“The chances are most airlines will look to curtail loss-making flights. The players will have to see that they do not violate the route dispersal guidelines of the Government by withdrawing these flights,” said a senior airline executive who attended the meeting.

Import option

A proposal for direct import of fuel by the airlines, rather than fuel purchase from domestic oil companies, was also mooted at the meeting. “This is certainly an option we all are considering,” Mr Mallya said. Import of ATF would save airlines the hefty sales tax levied by state governments, which vary from 4 per cent to 30 per cent.

The FIA Chairman, however, agreed that there were logistical issues to importing ATF, such as adequate storage facilities, which would have to be looked into. The high cost of ATF, which accounts for 45-50 per cent of the operating costs of airlines, is hitting profitability, said Mr Mallya.

Regulatory body

Also debated was the need for a regulatory body for monitoring airport charges, as airport operators were “charging anything from airlines”, Mr Mallya said.

The issue of air ticket pricing was not discussed at the meeting, as it was felt that yields would improve if airlines reduced capacity on some routes.

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