Indian Airlines Demand $1.5 Billion Interest-Free Credit From Govt


Airlines in India are demanding at least $ 1.5 billion from the government as an interest-free credit line, said Civil Aviation Minister Hardeep Singh Puri, as lockdowns and restrictions related to the coronavirus pandemic hurt demand for air travel.

The airlines in what is, until recently, the fastest growing air transport market in the world are also trying to defer loan repayments for six months without classifying those loans as “non-performing,” said Puri in a written response in parliament.

Local airlines have asked the government to include jet fuel in the South Asian nation’s goods and services tax and to abolish the excise tax on jet turbine fuel, the minister said.

Airlines such as IndiGo, Vistara, a joint venture between Tata Sons and Singapore Airlines, SpiceJet and the state-owned airline Air India, also want the government’s help in convincing aircraft rental companies to simplify leasing terms, as well as defer taxes and remove excise duties from Hardeep Singh Puri said in a written statement before parliament.


Airlines from Africa to Australia have been hit by the pandemic as companies restrict their travel, vacationers postpone travel and border restrictions restrict international travel.

Unlike countries like the US, which have offered financial assistance to airlines, Indian Prime Minister Narendra Modi has not yet announced a significant cash package for the aviation industry as the government is grappling with the worst economic slowdown among major nations.

India stopped air traffic in late March to curb the spread of the coronavirus pandemic. In May, the government allowed airlines to resume domestic operations at a third of their capacity, which was later increased to 60%. However, demand has only picked up slowly.

Revenue from Indian airlines fell from around $ 3.5 billion in the year-ago quarter to around $ 500 million in the April-June quarter, Puri said in his statement.


Puri is said to help Indian air carriers get the government to work regularly with overseas aircraft rental companies and financiers to ensure leased aircraft do not take off prematurely and to establish bilateral flight connections with countries like Canada, France, Germany, the UK, and the United States.

According to estimates by the Sydney-based CAPA Center for Aviation, Indian airlines will need up to $ 2.5 billion to fly on.

One or more of the country’s airlines are likely to fail unless additional funding is provided by the government or its owners.

India was one of the toughest places for the aviation industry even before the pandemic, with tariffs as low as 2 cents and some of the world’s highest fuel taxes.


However, the government is working with aircraft rental companies and financiers to ensure planes are not withdrawn prematurely, Puri said. Local traffic fell nearly 80% to just 12 million passengers in the five months ended July 31, hurting airline revenues, he said.

Nearly 3 million jobs in aviation and related industries and more than $11 billion in revenue could be lost in India this year due to the pandemic, according to the International Air Transport Association.

India is the second worst affected country in the world by the pandemic. It adds more than 90,000 cases daily and hits more than 5 million confirmed infections as of Wednesday.

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