The government is considering relief measures for airlines on multiple fronts, with no end in sight to the US-Iran war and airlines complaining of higher operating costs along with a drop in traffic. This week, it could clear the way for a Rs 5,000 crore emergency credit line guarantee scheme (ECLGS), which may provide some wind in the sails of struggling airlines.
Higher Costs Prompt Action
The aviation ministry is trying to get the Hotan route in China cleared, which will give relief to Air India on its flights to the west by bypassing Pakistan, saving the loss-making airline millions by avoiding extra fuel burn on the longer route. Additionally, efforts are on to get some relief on jet fuel excise as the base price is likely to remain high. These moves come after the 25% reduction in landing and parking charges at all 34 major airports for three months starting April 8 and the partial relief in jet fuel price hike for domestic flights for this month, which is sought to be extended to May also.
Financially strong airlines have informed the government they will be forced to cut flights if some operating cost relief is not provided, leading to fewer flights and higher fares. Weak airlines may simply shut down, leading to unemployment and poorer connectivity. To avoid that situation as the war rages on, the following measures are in the works.
ECLGS: Rs 5,000 Crore Credit Line
A Rs 5,000-crore ECLGS for airlines could be sent to the Cabinet for approval this week. A financially weak airline, for instance, has almost completely run out of funds and has not been able to pay salaries, PF, or TDS on time for some months now, which is a violation under the law. Continuing operations for this airline and others in a similar state depends on getting emergency funding. This will be subject to a limit of Rs 1,500 crore per airline, said ministry officials. While IndiGo, the only financially stable big airline in terms of generating revenues it needs, will be eligible for this scheme, it might not need the same.
Hotan Routing in China to Bypass Pakistan
Air India has submitted the complete plan for its wide-body Airbus A350s and Boeing 787-9s to bypass Pakistan airspace. The plan involves flights to Europe, the UK, and the US from Delhi and Mumbai flying to Leh, then entering China and from Hotan turning left to Kyrgyzstan, then taking the regular route to those destinations. The same applies on the way back. This route, Air India has told the government, will free India from the whims of Pakistan closing its airspace. Taking a longer route due to the closure of Pakistan airspace for almost a year now is leading to higher fuel burn, which at current fuel price levels and a weaker rupee is causing a dent to airlines, especially Air India.
