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Bailout package for airlines to be sought

NEW DELHI: Civil Aviation Minister Praful Patel will meet Prime Minister Manmohan Singh and Finance Minister P. Chidambaram next week to seek a bailout package for airlines, which have been hit by high jet fuel prices.

“We are very concerned and unhappy, as the rise in aviation turbine fuel prices is playing havoc with the financial health of airlines. We will have to seek relief and take whatever remedial measures possible,” Mr. Patel said here on Monday.

With ATF prices having jumped nearly five to six times since 2004, airlines have opted for curtailing of services and flight frequencies to cut input costs since ATF accounts for half of the operational costs.

Mr. Patel said though ATF prices had gone up, air fares had come down drastically and hence “the mismatch is going to hit airlines in a big way.” He said the aviation sector was an important element of the economy and it was not a good sign if the sector was in a bad financial state. The modernisation of airports may take a hit if airlines are not doing good business, he said. Asking for a bailout package, Mr. Patel said the base price fixed by State-owned oil marketing companies was quite high.

PTI reports:

Vijay Mallya-led Kingfisher also announced a hike in the surcharge ranging Rs.300-550. The same hike in fuel surcharge would be applicable on Deccan Aviation flights. “Kingfisher and Deccan have decided to increase their fuel surcharge from June 3,” a Kingfisher airlines spokesperson told PTI here on Monday.

An increase of Rs.300 in the fuel surcharge would be applicable on short-haul flights (distance travelled up to 750 km) and Rs.550 for long-haul ones (beyond 750 km), the spokesperson said.

Earlier in the day, Jet Airways too had announced a similar hike in fuel surcharge.

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