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Oof. Air India’s Financial Situation Gets Embarrassing

State-owned fuel suppliers at six airports in India are refusing to provide jet fuel for Air India planes because of a dispute over a large outstanding balance owed by the flag carrier (which is also state-owned). Airline officials say they are “hopeful” of resolving the issue quickly and insist that, so far, operations have not been affected by the disruption in the fuel supply.

In an embarrassing turn of events,Air India has been told its planes will no longer be refueled at six domestic airports within India. The astonishing move by members of the country’s state-run oil coalition (OMC) headed by Indian Oil is said to be the result of more than $550 million in unpaid fuel bills with the state-owned flag carrier reportedly not making any payments at all on the balance for nearly a full year.

Related: What Happened to the Indian Aviation Market?

“Fuel supply by OMC to Air India have been stopped on Thursday evening due to non-payment of dues,” an Indian Oil spokesperson told the Indo-Asian News Service (IANS).  “However, we are in touch with the airline and are hopeful of a resolution.”

Air India officials confirmed on Thursday that refueling at six Indian Airports, including Cochin International Airport (COK), Pune International Airport (PNQ), Patna Jay Prakash Narayan International Airport (PAT), Ranchi Birsa Munda Airport (IXR), Visakhapatnam Airport (VTZ) and Chandigarh Airport (IXC) has been suspended over unpaid debt. The airline says no flights have been delayed or canceled as a result of the dispute.

“We are in discussion with the OMC to resolve the issue,” an Air India spokesperson told the news service. “Additionally, we have also paid Rs 60 crore for past supplies and made today’s payments as well. Flights have been loaded with return sector fuel to ensure that operation will not get impacted. In the absence of equity support Air India cannot handle the huge debt service liabilities. Our financial performance, however, this fiscal is very good and we are moving towards a healthy operating profit. The airline despite its legacy issues is performing very well.”

This is just the latest setback for the state-run airline which made a failed bid to attract private takeover suitors last year. Since then, the carrier has relied in large part on government coffers to help pay the bills and maintain operations.

Comments are Closed.
hyho61 August 28, 2019

No one is flying free of cost, on the contrary all official government travel has to be on AI unless it does serve that market on the days of travel (there are other exceptions - cost/timing).

alexmyboy August 28, 2019

satishpower2000 seriously?

satishpower2000 August 27, 2019

Air India is the best Airlines for the comfort of passengers and customer satisfaction. The Government shall pay the Airlines for the tickets of the politicians, government officials and sports persons who travel free of cost. This will help the air line to revive.