Air carriers default on jet fuel payments

Bangalore: In a reminder of the situation in the mid-1990s that eventually led to the winding up of several airlines, severe liquidity crunch is forcing many airlines to push back the payment schedules of vendors, especially of oil marketing companies that supply aviation turbine fuel (ATF).
Speaking on condition of anonymity, a senior executive of state-owned Indian Oil Corporation Ltd said that, over the last six months, the dues of airlines were mounting as they failed to meet their commitment.
An executive from Bharat Petroleum Corporation Ltd also revealed that airlines had started faltering on their schedules. “Yes, of late airlines are delaying payment due to shortage of working capital,” he said.
However, both the state-owned companies refused to disclose any further details. They blamed the inability of the airlines to make payment on time on aggressive fleet expansion and price undercutting, which was eroding yields, and, thereby, squeezing their working capital.
05/10/06 Praveena Sharma/Daily News & Analysis

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