Economy

Stand off between oil retailers and Air India continues

Our Bureau New Delhi | Updated on August 23, 2019 Published on August 23, 2019

Eight Alliance Air flights cancelled

Flyers on Air India were at the receiving end of the tussle between the airline and oil companies for the second day on Friday.

Since Thursday evening Visakhapatnam, Kochi, Mohali, Ranchi and Pune were among the six airports at which oil companies declined to fuel Air India aircraft till their financial dues were cleared.

On Friday, Alliance Air, an Air India subsidiary, cancelled its Cochin-Aggati-Cochin flight and limited the number of passengers to between 45 and 50 from 70 earlier as oil companies declined to provide supplies at six airports unless the state-owned airline cleared their financial outstanding dues.

At least eight Alliance Air flights including Cochin-Mysuru, Hyderabad-Pune, Pune-Goa, Ranchi-Raipur, Ranchi Bhubaneshwar and Ranchi-Kolkata were affected on Friday. In addition, the Pune-Chandigarh flight had to make a stop at Mumbai to pick up fuel before continuing till Chandigarh thereby adding to the flying time.

The outstanding dues to oil companies are in the region of ₹3,500-4,000 crore, which sources in Air India do not dispute but point out that the issue of pending financials is not something new and has been discussed with the oil companies.

“We clear dues as soon as finances are available. The airline clears dues on an all India basis and it is not as if Air India will clear dues of one airport and keep another pending. We do not have any idea of how the six airports have been shortlisted by the oil companies,” said a senior Air India official.

In a statement the three oil companies said that considering the huge outstandings from Air India and their ramifications for their working capital requirements, the three OMCs were constrained to take the decision of stopping fuel supply to the airline at six airports.

“However, Air India flights operating from the six airports, where ATF supplies have been suspended, have been tanking up from other airports,” the statement said.

The statement also claims that the overdues were around ₹5,000 crore, including the interest accrued.

The statement adds that Air India uplifts about 250 kilolitres of ATF at the six airports on a daily basis.

“The three PSUs had served similar notices to Air India earlier but withdrew them subsequently and continued with ATF supplies on the assurance of Air India’s management that the outstanding dues will be cleared at the earliest. However, despite repeated follow-up and reminders for payment by the OMCs, no major reduction in the outstandings materialised from the airline till date,” the statement adds.

While Air India paid ₹60 crore on Thursday to the oil companies, no money had been released till late evening on Friday.

Air India officials argue that they are not in a position to immediately clear the financial dues till the government provides funds to the state owned carrier. Air India is seeking around ₹2,500 crore from the government.

Published on August 23, 2019
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