Air India constitutes over 80% of dues to Airports Authority of India

by Devesh Agarwal

Air India is well known for receiving thousands of crores of tax-payer rupees in bailouts, however, the unfettered largesse to the beleaguered national carrier does not end there. The airline is the constant recipient of indirect dole in the form of huge overdues to state-run service providers like the Airports Authority of India which runs most of the airports in India, and the state-owned oil marketing companies like Indian Oil which sell aviation fuel.

While these entities are quick to put private carriers on a “cash and carry” basis if they default, Air India is given a free run of their resources.

Airlines’ dues to AAI as of 31-Mar-2013

Last week, Minister of state in the ministry of civil aviation, Mr. K.C. Venugopal informed the Lok Sabha (the lower house of the Indian parliament) on the dues of airlines to the Airports Authority of India. The statement says

AAI takes adequate efforts to recover the dues by regular monitoring. Action is also taken as per the approved credit policy of AAI. Defaulting companies have to pay interest as per AAI Credit Policy on delayed payments. In cases where delay persists, besides encashing the Security Deposit, the defaulting airlines are put on ‘Cash and Carry Basis’. Interest @ 12% per annum is charged in respect of traffic dues. Interest on non-traffic dues is charged as per terms and conditions of the agreement which could be either 18% or 12%.

With about 19% of domestic market share, Air India’s dues of Rs. 1,539.75 crores, constitutes over 80% of the total dues, while leader IndiGo, whose market share is almost 30%, owes just Rs. 2.89 crore or 0.15% of the authority’s total dues.

In March, Minister of state for petroleum and natural gas Ms. Panabaaka Lakshmi informed the Lok Sabha, Air India owes state-owned oil companies Rs. 4,324 crore in outstanding fuel bills as on February 28, 2013. This is more than three times all the other domestic carriers combined.

It will be interesting to see the details on the Interest being charged to Air India, and why they are not being put on a cash and carry system.

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About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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