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Air India owes Rs 5,000 crore in fuel dues; hasn’t paid in 230 days, says OMCs

Air India owes Rs 5,000 crore to state-owned fuel retailers, due to which the three firms — Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp – cut supplies to Air India and Alliance Air at six airports.

By: ENS Economic Bureau | New Delhi |
Updated: August 24, 2019 7:43:58 am
Air India, Air India flight, Air India flight Delhi to San Francisco, Air India north pole flight, air india to fly over north pole, air India flight tickets, Indian express Snapping of fuel supplies by retailers cuts only flight connecting Lakshadweep. (File)

Non-payment of dues by Air India to oil marketing companies, which led to the retailers snapping fuel supplies to the national carrier, has resulted in Lakshadweep going off India’s aviation map till such a time supplies are restarted to the flag-carrier and its regional arm Alliance Air. The only flight connecting Lakshadweep to the mainland was flight from Kochi to Agatti airport operated by Alliance Air. This flight was cancelled on Friday.

Air India owes Rs 5,000 crore to state-owned fuel retailers, due to which the three firms — Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp – cut supplies to Air India and Alliance Air at six airports.

“The joint decision to stop fuel supply to Air India from six airports, i.e., Kochi, Mohali, Pune, Ranchi, Patna and Visakhapatnam, was taken by the oil marketing companies in the wake of long overdue payments to the tune of Rs 5,000 crore,” IOC said in a statement issued on behalf of the three firms explaining the constraints that led to take the harsh decision. The overdue amount includes the interest accrued on the outstanding dues.

Air India has a 90 day credit period, which means the aviation turbine fuel (ATF) it buys on a given day has to be paid for in three months. But Air India had not been making payments and the credit period was now 230 days, IOC said. The three OMCs through a letter dated August 14 intimated the Air India management of their decision to stop fuel supplies at the six airports with effect from August 22 if dues were not cleared.

Also read | Setback for Air India as oil companies stop fuel supply at six airports

The national carrier uplifts about 250 kilolitres of ATF at the six airports on a daily basis. “The three PSUs had served similar notices on Air India earlier but withdrew them subsequently and continued with ATF supplies on the assurance of Air India 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 outstanding materialised from the airline till date,” the statement said. A senior IOC official said that Air India had offered to pay Rs 60 crore which was “a drop in the ocean” as compared to what the airline owed to the three firms.

The Alliance Air flights affected due to fuel supply cut are Kochi-Agatti, Kochi-Mysore, Hyderabad-Pune, Pune-Goa, Ranchi-Raipur, Ranchi-Bhubaneswar, Ranchi-Kolkata and Chandigarh-Kullu.

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