Kingfisher Airlines will now have to pay upfront to buy aviation turbine fuel from oil companies to operate its regular scheduled flights. This follows the oil companies insisting on the new payment method, ‘cash and carry’ for the airline as it has failed to clear its dues.
While oil industry sources maintained that the airline owes over Rs 1,000 crore in dues to the oil companies, the official who did not wish to be named, said it was only half of that amount. ATF constitutes about 50 per cent of the total operational cost of an airline. The official said that the airline will abide by the directives of the Government with regard to settling of ATF dues with the oil companies. He added the airline was currently holding talks with Government officials on the issue of dues to oil companies.
Sources in the oil industry said that with Kingfisher Airlines agreeing to the ‘cash and carry’ mode, oil marketing companies will not carry out any immediate action against the airline, though they will continue to seek ways to get the dues from the airline. The official from the airline pointed out that they have received a letter from the oil marketing companies (OMCs) asking for payment of interest on outstanding dues and bank guarantee. A joint meeting of all stakeholders had been facilitated by the Government on October 22, 2008 where the representatives of the OMCs, airline chiefs and the Minister for Civil Aviation and the Minister for Petroleum and Natural Gas were present too.
“The minutes of this meeting do not make any reference to any of these two points (interest and bank guarantee) made by the OMCs in their latest letter, nor is there any record of this ever having been discussed or agreed to at that meeting. We have, therefore, taken this up with the Government and we will fully abide by any directions that the Government may give in this regard,” he said. Sources in the oil industry said that Jet Airways, Kingfisher Airlines and the National Aviation Company of India owe nearly Rs 4,000 crore in dues to the OMCs for supply of aviation turbine fuel. The Government had earlier allowed a credit of 60 days and later extended it by another 30 days in October, 2008 after some of the airlines had expressed their inability to retain their existing staff because of soaring ATF prices at the time leading to huge losses for these airlines.
On October 22, 2008, the airlines were allowed to pay the total outstanding dues of Rs 1,500 crore in six monthly installments by March 31, 2009. The OMCs had also agreed to revise ATF prices every fortnight instead of every month to pass on the benefit of falling ATF prices to the airlines.
While oil industry sources maintained that the airline owes over Rs 1,000 crore in dues to the oil companies, the official who did not wish to be named, said it was only half of that amount. ATF constitutes about 50 per cent of the total operational cost of an airline. The official said that the airline will abide by the directives of the Government with regard to settling of ATF dues with the oil companies. He added the airline was currently holding talks with Government officials on the issue of dues to oil companies.
Sources in the oil industry said that with Kingfisher Airlines agreeing to the ‘cash and carry’ mode, oil marketing companies will not carry out any immediate action against the airline, though they will continue to seek ways to get the dues from the airline. The official from the airline pointed out that they have received a letter from the oil marketing companies (OMCs) asking for payment of interest on outstanding dues and bank guarantee. A joint meeting of all stakeholders had been facilitated by the Government on October 22, 2008 where the representatives of the OMCs, airline chiefs and the Minister for Civil Aviation and the Minister for Petroleum and Natural Gas were present too.
“The minutes of this meeting do not make any reference to any of these two points (interest and bank guarantee) made by the OMCs in their latest letter, nor is there any record of this ever having been discussed or agreed to at that meeting. We have, therefore, taken this up with the Government and we will fully abide by any directions that the Government may give in this regard,” he said. Sources in the oil industry said that Jet Airways, Kingfisher Airlines and the National Aviation Company of India owe nearly Rs 4,000 crore in dues to the OMCs for supply of aviation turbine fuel. The Government had earlier allowed a credit of 60 days and later extended it by another 30 days in October, 2008 after some of the airlines had expressed their inability to retain their existing staff because of soaring ATF prices at the time leading to huge losses for these airlines.
On October 22, 2008, the airlines were allowed to pay the total outstanding dues of Rs 1,500 crore in six monthly installments by March 31, 2009. The OMCs had also agreed to revise ATF prices every fortnight instead of every month to pass on the benefit of falling ATF prices to the airlines.
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