Assocham has written to the Union Civil Aviation and Finance Ministries requesting airlines be allowed to avail up to 100 per cent of their credit outstanding (fund and non-fund based) subject to a cap of ₹1,000 crore under the Emergency Credit Line Guarantee Scheme (ECLGS).
The industry body has requested amendment to the ECLGS to “help airlines” in view of rise in aviation turbine fuel (ATF) and devaluation of the rupee to the dollar (from ₹70 per dollar to ₹80).
Labour reforms will hurt employmentLabour laws’ deregulation has worsened labour productivity and incomes, thereby hurting economic growth
“It is further requested that the same may be allowed to be availed from existing Member Lending Institutions (MLI) or any other MLI on the basis of a no objection certificate issued by existing MLI,” a letter by the industry body, and reviewed by BusinessLine, said.
According to the letter, the extension of the ECLGS will enable the aviation sector to avail additional loans “to surmount the current unprecedented and extremely hostile ecosystem”.
The current scheme
Under the current ECLGS 3.0 (extension) scheme, the amount of guaranteed emergency credit line funding available to airlines is up to 50 per cent of total credit outstanding (fund and non-fund based), subject to a cap of ₹400 crore.
In the letter to the Ministries, Assocham maintains that the civil aviation industry is in an unprecedented crisis.
“Over the past three years, the Covid-19 pandemic had a severe impact. Post Covid while aviation is still not back to pre-Covid level traffic levels. The industry has been further hit by an unprecedented rise in ATF. For an already struggling industry, the rise meant that fuel alone accounts for almost 75 per cent of airline revenues,”it said adding that airlines are now left with “little ability to pay for aircraft, airports, maintenance, salaries and other expenditure.
The devaluation of the rupee has further “aggravated the situation” since large portion of the airlines costs (including ATF) are denominated or impacted by the exchange rate.
The air traffic data released by DGCA for June shows around 1.05 crore people travelled by air, down by 9 per cent month-on-month. In May, 1.15 crore people had travelled, DGCA’s monthly report said.
For the first six months of the year (January-June), over 5.72 crore people travelled, a y-o-y increase of 67 per cent.
According to the monthly traffic report, IndiGo carried 59.83 lakh passengers in June and had a 56.9 per cent share of the domestic market. SpiceJet flew 10.02 lakh passengers and Go First flew 9.99 lakh passengers. Vistara, Air India, AirAsia India and Alliance Air carried 9.92 lakh, 7.83 lakh, 5.9 lakh, 1.2 lakh passengers, respectively.