The Hindu Business Line : Patel to meet PM on aviation fuel price

New Delhi, June 2 With domestic airlines looking to curtail flights and going in for greater cooperation among themselves to minimise the impact of rising cost of aviation turbine fuel (ATF) on their bottomline, the Minister for Civil Aviation, Mr Praful Patel, plans to meet with the Prime Minister, Dr Manmohan Singh, to consider ways to improve the situation for the sector.

Addressing a press conference, Mr Patel said that he would be meeting the Prime Minister in a week or so to make a presentation on the “entire problem” being faced by the sector.

“The Government is very concerned about the financial health of the sector. Rising fuel prices will hurt the airlines and sector in a big way. All airlines without exception are speaking to the Government and expressing helplessness at the situation and the inability to pass on the entire increase in ATF cost to the passengers by raising the fuel surcharge,” the Minister said. At the moment ATF constitutes 40-45 per cent of the operating cost of most domestic airlines.

The sector has been reeling under mounting losses with cost of ATF increasing manifold in the past few months. On Saturday domestic oil companies increased ATF price by more than 18 per cent, a move that saw domestic airlines hike fuel surcharge by up to Rs 550 to Rs 2,900. Despite the increase in fuel surcharge, the industry is expected to post losses in excess of Rs 2,000 crore, according to some analysts.

Stating that the Government does not have any “concrete plans or steps” to help the aviation industry at the moment, the Minister said that something needed to be done as aviation has a key role to play in the development of the economy.

“There are no plans of doing away with the route dispersal guidelines. The Group of Ministers looking into the civil aviation policy will have to decide whether the existing norms for flying abroad should be changed to help the industry. We have written to the Empowered Committee of State Finance Ministers asking that ATF across the country attract a standard 4 per cent duty, which should be a major relief for the airlines,” the Minister said.

Industry options

Meanwhile, industry is considering various options to curtail losses.

“All airlines need not do ground services or have a huge engineering department to look after their individual fleets. We can all cut costs if rules are changed and say IndiGo Airline engineers are also allowed to look after the aircraft of Kingfisher airlines since both operate the Airbus A-320,” said an airline official.

The Government could, however, do its bit by reducing the landing and parking charges at airports as also the navigation fees which are among the highest in the world, another airline official said.

“These steps may seem small but will go a long way in reducing the cost structure of airlines operating here,” airline officials said.