Aviation Sector Crisis: Airlines in India Seek 'Emergency Credit' From Oil Firms, Airports to Combat Rising Cost
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New Delhi, November 21: Amid rising fuel prices and decline in rupee against the US dollar, airlines in India have sought an emergency credit from oil firms and state-run Airports Authority of India (AAI) and private airports. Reports inform that airlines in India are seeking help from the government to obtain unsecured credit from several oil companies to combat the rising cost. Reports claim that the recent spike in oil prices has pushed the Indian airlines deeper into losses.

According to a report by Hindustan Times, the aggressive pricing are stopping fares from rising to reflect higher input costs, the Federation of Indian Airlines said in a letter sent to the aviation ministry’s top bureaucrat last week. The letter said there is a considerable cash-flow mismatch between costs and revenues earned. In wake of the growing loss, the Federation urged the aviation ministry to assist airlines in obtaining a penalty-free, one-a-month unsecured credit line from oil companies and airports.

According to the report, the communication addressed to Aviation Secretary Rajiv Nayan Choubey said that the airlines are facing a difficult time by facing massive losses in the domestic environment. The FIA which consists of Jet, InterGlobe Aviation Ltd.’s market-leading IndiGo, SpiceJet Ltd. and Go Airlines India Ltd., accounts for almost 80 percent of the domestic market.  Jet Airways in Talks with Various Investors for Sustainable Financing, Says CEO Vinay Dube.

According to a report by PTI, the domestic airlines' industry in India is believed to post losses of $1.65-1.90 billion this fiscal year due to higher costs and lower yields. The India unit of Sydney-based Centre for Asia Pacific Aviation (CAPA) said in its Mid-Year Aviation Outlook 2019 said that the airlines need to raise over $3 billion in near term based on June quarter estimates, with full-service carriers requiring around $2.6 billion and the low-cost peers needing $400 million. Jet Airways’ Pilots Say No to Additional Duties If Salary Dues Not Cleared by November 30. 

The HT report quotes CAPA saying that most of the airlines in India have cash balances that can cover expenses for only two to three weeks. Meanwhile, the CRISIL Ltd informs that Indian carriers would need to raise fares by 12% to offset the double blow from fuel and currency depreciation.