A red letter from Patel to PM

The airline industry8217;s grim projection of Rs 8,000 crore in losses this year has prompted the civil aviation ministry...

The airline industry8217;s grim projection of Rs 8,000 crore in losses this year has prompted the civil aviation ministry to take serious note of the issue. In a letter to Prime Minister Manmohan Singh requesting to meet him on the matter, civil aviation minister Praful Patel has said that urgent measures were needed to 8220;save the sector from sickness.8221; The minister is scheduled to discuss the issue with the PM on June 11.

8220;Indian aviation has been growing for 20-25 per cent every year for the last few yearsiquest;The growth story is now at crossroads. One of the main factors responsible for this is the high cost of ATF which unlike some other hydrocarbons, is not subsidised. The airlines have so far been attempting to absorb a major part of ATF price increase. This is impacting the financial health of the industry,8221; Patel said in his letter, a copy of which is with The Indian Express.

Patel says that the domestic aviation industry incurred losses of Rs 4,000 crore in 2007-08, which could be much higher during the current fiscal due to rising jet-fuel prices. Civil aviation secretary Ashok Chawla today said that the losses could go up to Rs 8,000 crore or roughly 2 billion in the current year, if ATF prices continue to rise.

The unprecedented rise in ATF, which has been hiked four times in the last year, has become a serious cause of concern in the ministry. 8220;Given the current trend, it is only a matter of time before this dynamic sector becomes one of the unhealthy sectors of the economy. More than airlines, these are fundamental issues which concern people8217;s lives, their jobs and vital issues of connectivity in a large country,8221; the minister has written, adding that urgent ways and means need to be adopted to save the sector from decay.

It is expected that Patel would push for 8216;declared goods8217; status on ATF as one of the primary interim relief measures for the industry. By notifying ATF as a declared good, all states would have to reduce sales tax on it to 4 per cent from 25-33 per cent prevalent in most places currently. 8220;Even a uniform 12 per cent sales tax on ATF being mooted earlier is not going to help now. Only a declared goods status on ATF will help,8221; Patel had said two days ago.

Minister says8230;

8226;The issue concerns the lives and jobs, and connecting the country more than airlines themselves

8226; Absorbing the ATF price increase is impacting the financial health of the industry

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8226; Given the current trend, the industry is not far from becoming an unhealthy sector

8226; PM must save the sector from sickness

DGCA8217;s fuel conservation plan

8226;Airplanes should taxi on one engine after landing

8226;Use ground power unit which runs on petrol while taxiing, rather than axillIary power unit which runs on costlier ATF

8226;Avoid excess fuel upliftment at cheaper stations. This makes aircraft heavier and unable to fly at high altitudes where fuel efficiency is better if 5,000 kl of extra fuel is uplifted, 400 kl more is needed just to carry the surplus.

Airlines8217; woes

8226; 2 billion in losses for Indian domestic carriers this year

8226;Capacity on ground being cut down by 20 per cent in a coordinated manner

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8226;Air traffic control delays up to 50 minutes at Mumbai, Delhi, results in greater fuel consumption

WHAT THEY WANT

8226;Rationalisation of taxes. Sales tax on ATF should be calculated on base price of ATF

8226;No increase in airport charges

8226;Relaxation in new refund guidelines issued by DGCA