Govt cannot financially help private airlines: Ajit Singh

Ministry will try to persuade AAI, fuel suppliers for easier terms to the airlines

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New civil aviation minister Ajit Singh has ruled out any government help for loss-making Kingfisher Airlines.

“Supporting (state-owned) Air India is government's responsibility,” he said, but the same yardstick couldn’t apply for private airlines.

“Private carriers will have to convince their bankers that they have a viable business plan and ask for help from the bankers. The government cannot and will not give them working capital to operate the airline,” Singh had told. 

This comes in the wake of Kingfishers chairman Vijay Mallya's letter seeking government support as per a report in BS. Mallya also wrote to frequent flyers of the airlines seeking their support in the troubled times.

However, Ajit Singh’s ministry is to ask the Airports Authority of India to grant Kingfisher additional time to pay its dues, amounting to Rs 240 crore. Similarly, it is to write to the petroleum ministry to consider Kingfisher's request for a 15-day credit for aviation turbine fuel purchase from Hindustan Petroleum Corporation (HPCL).

Singh will also be convening a meeting of state governments to put forth the aviation sector demands for reduction in sales tax and octroi on aviation fuel.

In his letter to Singh, Mallya painted a grim picture of the airline having to downsize operations significantly if it did not get funding quickly. Without a temporary overdraft to meet working capital requirements, said Mallya, the airline would not be able to maintain its normal schedule. He also requested a 15-day credit period for fuel purchase.

“Our lessors have gone to court in London against non-payment of lease rentals. If we don't clear dues, our aircraft will be grounded,'' Mallya wrote.

The airline is in financial crisis even after It had restructured Rs 7,000 crore of debt with banks’ approval. The package included conversion of about 30 per cent of the debt by banks into capital and of a loan of Rs 735 crore from parent company UB Holdings into equity.

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