"Major long-haul flights like Delhi-London and Delhi-Toronto have been hit and we've had to halve their frequencies,"
An official from the civil aviation ministry corroborated the information, saying that the new cabinet secretary Ajit Kumar Seth wanted a briefing on the matter. However, an official release from the airline said that only 26 flights have been curtailed as they have been clubbed or rescheduled as part of commercial reasons, and not due to fuel crunch. "Fuel is not an issue. Enough fuel is available and we are paying the OMCs as mutually agreed upon."
The official release also says that such commercial decisions have been taken because June-September is a lean period for travel, whereas sector experts believe that June is peak travel period and the lean season sets in only from July. According to a direction to the petroleum ministry by the cabinet secretariat in April, oil companies were supposed to supply aviation turbine fuel (ATF) worth Rs 18.5 crore to the ailing carrier for a cash payment of Rs 16 crore until May-end, under a cash and carry arrangement.
"But the government has instructed to us that cash and carry should be strictly followed by oil PSUs and Air India will take only as much fuel as it pays for," a senior official from one of the oil companies told ET.
"Giving any extra credit to the airline means that their outstanding bills of Rs 2,400 crore go on increasing and so the government has instructed us to observe cash and carry arrangement strictly again on Thursday," he added. Subsequently, the oil companies have curtailed this credit of Rs 2.5 crore, which is hitting operations. Air India requires 3,790 kilolitre of jet fuel each day to carry on its operations. But Rs 16 crore can buy only 3,290 kilolitre of ATF, which is 8% less than the total requirement;
On Wednesday too, Air India bought fuel worth only Rs 16 crore, said an oil company.
Oil PSUs like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation (HPCL) had stopped extending fuel on credit to Air India last Friday, when the airline was forced to ground 20 flights. Last December, they had put the ailing carrier on cash-and-carry sales model, but gave upto Rs 18 crore worth of fuel for an upfront payment of Rs 12-13.5 crore.
Air India has a colossal debt of Rs 40,000 crore and accumulated losses of Rs 13,000 crore. The airline earns Rs 36 crore a day, and loses Rs 57 crore, thereby losing Rs 21 crore a day. It has landed itself in the worst debt trap, where it spends all its earnings in repayment of interest on aircraft loans, working capital, aircraft capital and fuel expenses.
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