Bitten by the steep and ever increasing fuel prices, Airline Companies in India have sought refuge from the Government of India by way of budgetary support to tide over the financial crisis. Civil Aviation Minister, Mr.Praful patel would meet Dr.Manmohan Singh along with top brasses of the Airlines to present a ‘bailout’ plan.
The package seeks a subsidy of about Rs.8000 Crores by way of cut in the duties and taxes on the jet fuel. The other measures considered are a freeze on airport rentals, landing and parking fees and air-traffic navigation charges. However, the chief area for consideration by the Prime Minister is ‘Aviation Turban Fuel’ whose prices have gone up by 40% in the last six months as this constitutes the bulk operational cost of the airlines put at 40%.
In the meanwhile, many domestic carriers have resorted to cutting costs by reducing frequency on Short-haul routes, such as Chennai-Bangalore, Bangalore-Hyderabad etc., This is because of the fact that they are operating in a high cost environment and cannot compete with other modes of transport. The costs have been so spiraling that some of the Companies are reported to have defaulted in their fuel payments.
Hence the imperative for a ‘bail out plan’. It has both short-term and long-term objectives. In the short-term it should to a great extent relieve these companies from financial crisis and in the long-term it is aimed at improving their competiveness vis-a-vis other modes of transport.
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