Air India, Jet and Kingfisher - have sought government intervention in getting banks to lend working capital to them. An aviation ministry source said that banks have completely stopped lending to airlines and that the sector is facing its gravest fight for survival.
"Airlines have told us that bank funds are out of bounds for them even as working capital requirement is shooting up. With crude oil at $130 a barrel , there are indications that jet fuel price will rise again. Banks ask for viability before lending but the sector as of now is anything but that," said a source, warning that unless some sector-specific package is worked out, other airlines too could join the ranks of AI and Kingfisher, who are on the verge of closure as per a report in ET by Saurabh Sinha.
The ongoing Kingfisher crisis is, in fact, proving to be a double-edged sword for the aviation ministry. While it realizes the sector as a whole needs a package to survive, any push at this time "is being seen as a sop to save Kingfisher," said a senior official. While this charge virtually rules out any swift action, Kingfisher itself is benefiting from this muddle.
Aviation authorities say they will keep a close eye on the situation in Kingfisher on Monday from when a many pilots have threatened to go on strike for not getting paid. If that happens, the airline would not be able to meet the highly truncated schedule of 175 daily flights on 28 working aircraft.
"If Kingfisher comes to a position where it can't keep its schedule because of unpaid pilots going on strike, we'll need to take some action. But if we do that, how can we overlook AI, where unpaid pilots have threatened to go on leave from April 1?" said an official, adding that the only difference is that AI is government-owned.
The ministry is worried that the small LCCs may not be able to escape the fate of the big players as the cost environment is getting worse due to high jet fuel prices. But with a policy paralysis plaguing the government, no one is sure whether UPA-II will act before it is too late.