Compared to the global average of 20 to 25 per cent, in India, ATF constitutes 40 to 45 per cent of an airline’s operating cost. Hence, a cut in taxes can pull many airlines out of the red.

Dearth of passengers, high fuel rates, heavy airport charges and, worse, the global recession proved to be the proverbial last straw that sent India’s ailing private airlines careening down the hill, eliciting a howl of protest and indignation at the perceived injustice of it all. Rendered helpless by the cumulative blows, a peeved Federation of Indian Airlines (FIA) called a strike on August 18—only to withdraw it in the face of a combative government and “agitating public sentiments”.

Civil Aviation Minister Praful Patel warned of action and pressed for a dialogue with the private carriers, who said they were “bleeding”. “The government understands the difficulties being faced by the aviation sector. However, the government does not support any move that will inconvenience the travelling public of the country. We advise the airlines to engage in a dialogue with the government,” Patel exhorted, adding: “Air India will not participate in this decision of select private airlines and will mount additional services on August 18 to reduce any inconvenience to the public.” Apart from claiming accumulated losses of over $2 billion (Rs 10,000 crore), the private carriers owe nearly $500 million (Rs 2,500 crore) toward fuel to oil companies. “The issue of tax on ATF (Aviation Turbine Fuel) is a state issue and the Aviation Ministry has been requesting the states for the last few years to see reason. The other issues primarily relate to the slowdown in the economy global and domestic and the impact of high prices of ATF in 2008-2009,” the Civil Aviation Minister pointed out. He, however, ruled out any bailout package for the aviation industry.

The first chink appeared in the FIA armour when budget carrier Indigo pulled out of the strike and another lowcost airline SpiceJet decided to operate all flights on August 18. MDLR, which is not a member of the federation, said it would operate flights as scheduled. Paramount Airways, too, decided to keep away from the strike, which meant no trouble to the travellers beyond the Vindhyas. With its members backing out, the FIA’s call for strike fell through. Undeterred, it decided to go ahead and meet with Patel. The FIA delegation comprising Air India Chairman and Managing Director Arvind Jadhav, Jet Airways Chairman Naresh Goyal, Kingfisher Airlines Chairman and Managing Director Dr Vijay Mallya, SpiceJet Chief Executive Officer Sanjay Agarwal, IndiGo Chairman Rahul Bhatia and President Aditya Ghosh, GoAir Managing Director Jeh Wadia and FIA Secretary-General Anil Baijal met the minister soon after calling off the strike.

FIA—which represents the interests of the operators—is pushing for a cut in jet fuel taxes to 4 per cent from an average rate of 26 per cent across the country. Compared to the global average of 20 to 25 per cent, for India’s airlines, ATF constitutes 40 to 45 per cent of the operating cost. Hence, a cut in taxes can pull many airlines out of the red. The FIA has also called for cut in other charges, including airport development levy, landing charges and navigational fees.

Refusing to succumb to pressure for a bailout package for private airlines, the government has made its stand clear: using taxpayer money to help private airlines cope with a financial loss is not justified. When Naresh Goyal owns about 80 per cent of Jet Airways and Vijay Mallya holds a bulk of Kingfisher, why should taxpayer money help enrich them in the business? They would have to pull their airlines out of the red, is the government’s response.