Government working on policy package for troubled airlines

With Air India and Kingfisher going through their worst crises, the government is working on a policy package to help the entire cash-strapped industry come out of the financial rut, official sources said today.

In order to formulate such a package, the Civil Aviation Ministry has asked all scheduled airlines, including profit-making IndiGo, to submit data on their prevailing financial position. Seven scheduled carriers, including Air India, have submitted the required information this weekend, the sources said.

The information sought by the Ministry relates to their overall financial situation, the extent of debt with financial institutions and their working capital requirements.

A Working Group has been constituted under the chairmanship of Civil Aviation Secretary Nasim Zaidi, which would examine the data and the problems of the airlines.

Consultations would be carried out shortly by Civil Aviation Ministry, the Department of Financial Services and Banks of the Finance Ministry on the issue, the sources said.

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The discussions would aim at preparing an overall policy prescription for the industry, as the government cannot provide any direct financial dole to bail out the private airlines, they said.

Besides IndiGo, the other carriers which submitted the required information are Air India, Jet Airways, JetLite, Kingfisher, SpiceJet and GoAir.

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Premier aviation consultancy firm Centre for Asia Pacific Aviation has forecast a record USD 2.5-3 billion loss for all Indian airlines for the year ending March 2012, with Air India alone likely to account for more than half of it. The government's move came in the backdrop of Prime Minister Manmohan Singh saying last November that the government would explore "ways and means" to help the airline industry. He had however pointed out that private sector airlines should be managed efficiently.