New Delhi: While both the government airline Air India and private airlines are bleeding to death, this Friday the government is coming out with a bailout for national carrier and no bailout for private airlines.
It's not clear why the discrimination, surely both private and public are Indian and sure both are suffering from the same high costs.
On Friday the Maharaja will be ready with its plan to reclaim its shrinking space in the skies, as the government has assured financial assistance to the national carrier but these are clearly turbulent times for Indian aviation.
Here's why:
Jet fuel costs in India are 60-70 per cent higher than global prices while taxes are as high as 35 per cent - the bulk of which is imposed by state governments. In Europe, fuel forms 30 per cent of operating costs but in India it's as high as 50 per cent.
Jet fuel costs:
- 60-70% higher price than global prices
- Total government levies and taxes: 35%
- State governments alone charge 4-30%
- Jet fuel constitutes 33% of operating costs for European carriers
- Jet fuel constitutes 45-50% of operating costs for Indian carriers
That's why private airlines had threatened to go on strike on August 18. Tough talk by the government may have forced the airlines to back off but surely the government needs to do more to revive the aviation industry.
What ails private airlines?
- Rising jet fuel costs
- Declining passenger numbers
- Over-expansion
- Want cut in airport fees, taxes
Govt vs airlines:
- Praful: No bailout for private carriers
- Naresh Goyal: All airlines are bleeding
- Praful: Will hold talks with airlines
- Mallya: Impossible to pay punitive taxes
- Praful: We understand airlines' problems
Aiding Air India:
- Air India needs Rs 4,500 crore bailout
- Bailout linked to performance
- Air India to cut costs, restructure
- Air India's losses: Rs 5,000 crore
Source: Frost & Sullivan