Govt should mandate force majeure for all civil aviation contracts: FICCI

Our Bureau New Delhi | Updated on April 01, 2020 Published on April 01, 2020

Also wants credit period for payment of fuel charges to be extended to 180 days

The Federation of Indian Chambers of Commerce and Industry (FICCI) has recommended that the government should mandate that force majeure applies to all civil aviation contracts to save the domestic civil aviation industry from the Covid-19 induced crisis.

This is one of the recommendations that FICCI has made in a five-page letter to Hardeep Puri, Union Civil Aviation Minister, that it released to the media on Wednesday. The term ‘force majeure’ means unforeseeable circumstances that prevent someone from fulfilling a contract. With airline cancellations far outstripping any fresh ticketing the airlines have negative sales during Covid-19 pandemic, FICCI says it is recommending deferment of payment of GST by airlines.

Losses piling up

With the coronavirus hitting airlines globally, the International Air Transport Authority (IATA) on Tuesday estimated that the loss to global airlines during the second quarter could be $39 billion and global airlines were also looking at around $35 billion of ticket refunds during the second quarter.

FICCI also suggested that the government should look at providing flexibility to airlines from oil marketing firms to help ease their liquidity position. It suggested that the interest-free unsecured credit period for payment of fuel charges to oil marketing companies should be enhanced to 180 days from the current 21 days.

“Therefore, Oil Marketing Companies may be directed to extend unsecured interest-free credit terms to the aviation sector,” FICCI suggested. Aviation Turbine Fuel cost is one of the three major costs for most domestic airlines.

Meanwhile, the Airports Council International (ACI) in its revised revenue forecasts shows the 2020 impact of the pandemic now at $23.9 billion for Asia-Pacific only, impacting airports of all sizes. “Taking into account the rapid developments, ACI estimates the first quarter loss in Asia-Pacific in the range of $5.6 billion, almost double its earlier estimates,” it said in a letter to Prime Minister Narendra Modi

Published on April 01, 2020

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