Men cook flatbread as an Indian Airlines Ltd. plane passes overhead near the airport in Mumbai, India

India’s private airlines, awash in red ink, say they will ground their planes in an unprecedented one-day stoppage to demand the government act to ensure their survival.

“We need help to stay in business,” said Naresh Goyal, chairman of Jet Airways, India’s second-largest carrier by market share, as the stoppage for August 18 was announced late last week.

India’s airline sector was once vaunted as a symbol of the country’s economic vibrancy. But its fortunes have nosedived due to overexpansion, intense competition and expensive fuel and other costs.

The move to suspend flights is to “highlight the urgency for the government to intervene immediately,” said Anil Baijal, secretary general of the Federation of Indian Airlines (FIA) which represents seven private carriers.

Vijay Mallya, chairman of Kingfisher Airlines, India’s largest airline by market share, threatened the carriers may keep their planes out of the skies indefinitely unless the government takes action.

“Our losses are no longer sustainable,” said the billionaire tycoon, whose holdings also include United Spirits, India’s largest liquor maker.

“It costs us more to fly than to stay on the ground,” he said.

The private airlines are pushing their case after the government said it would pump in money to rescue state-run flagship carrier Air India, which is also reeling from losses.

After the government opened India’s skies to more competition in 2004, a clutch of new airlines took flight amid predictions of double-digit passenger growth.

But costlier fuel pushed up fares, sending many passengers back to trains. Now the sector has also been hit by a slowing economy, reducing travel. From January to June, airline passengers fell by eight percent.

The stoppage threat comes as the airlines are announcing new losses. Jet Airways said it lost 2.25 billion rupees (US$47 million) in the first quarter while Kingfisher reported a net loss of 2.40 billion rupees.

Losses for the entire sector last year are estimated at two billion dollars of which Air India accounted for half.

India’s airline losses represent nearly a fifth of the $10.4-billion loss posted by airlines globally last year even though the country accounts for just two percent of the world’s flying public.

The government “has to help them (the airlines) reduce high structural costs… the industry now is at a very critical stage,” Kapil Kaul, India head of the Center for Asia Pacific Aviation, told AFP in a recent interview.

The airlines say they want lower airport landing, parking and ground handling charges which they say are 10 percent more than the global average.

But the biggest issue is fuel costs.

Jet fuel is taxed at an average 26 percent rate by India’s states.

As a result, fuel costs in India are 50 percent more expensive than the average paid by airlines globally, said the FIA’s Baijal.

The airlines want jet fuel to be declared an essential commodity along the lines of cooking grains and taxed at four percent.

The airlines are being “taxed to death,” Mallya told CNN-IBN TV.

“We’re not looking for a bail-out and we’re certainly not looking for charity,” said Mallya, whose airline owes more than 9.5 billion rupees in unpaid fuel bills.

“All we’re asking for is lower taxes on fuel to bring costs to par with international rates. We can take care of the rest,” he said.

The government says it sympathizes with the airlines’ plight and wants talks but has told them not to suspend their services, warning them of legal action.

“The government understands the problems faced by the aviation sector. But it doesn’t support any move that will inconvenience the travelling public,” Civil Aviation Minister Praful Patel said.

Mallya, who says the airlines will reconsider their stoppage decision if their problems are addressed, says Air India is not the only carrier deserving government help.

“Air India is owned by the people of India (but) we are also owned by the people of India – we have small public shareholders,” he said.

Source: AFP