Mumbai: If one has to be find sectors in the economy that are in serious trouble, the aviation sector might be right at the top. The combined accumulated losses of the airlines sector stands at Rs 49,000 crore, and now the government is reportedly planning for a bail out package for the sector including private carriers like Spicejet, Jet Airways.
Financial Express reports that the government might be drawing up a plan that will offer working capital loans to the companies at a lower rate of 7-8%. The government might allow the companies to get more funds from abroad, and even allow easier policies for FDI.
But the real question remains so why are the airlines making losses? The common answer would be high taxes of aviation fuel, high airport taxes, expensive loans and very heavy debt burden on their balance sheets.
It is true that if the government offers loan at lower costs, it will come as some relief for the companies and bring down their interest costs.
But any one time relief packages over the airport or ATF taxes will not make much of a difference for two reasons.
01/08/14 Rajanya Bose/Daily News & Analysis
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Financial Express reports that the government might be drawing up a plan that will offer working capital loans to the companies at a lower rate of 7-8%. The government might allow the companies to get more funds from abroad, and even allow easier policies for FDI.
But the real question remains so why are the airlines making losses? The common answer would be high taxes of aviation fuel, high airport taxes, expensive loans and very heavy debt burden on their balance sheets.
It is true that if the government offers loan at lower costs, it will come as some relief for the companies and bring down their interest costs.
But any one time relief packages over the airport or ATF taxes will not make much of a difference for two reasons.
01/08/14 Rajanya Bose/Daily News & Analysis
