31-May-2011 9:45 AM

Air India to reduce capacity by 10-20% over jet fuel payments

Air India head of corporate communications Kamaljeet Rattan stated the carrier will operate around a dozen fewer services per day until mid-Jun-2011 as the carrier is unable to make full jet fuel payments (Dow Jones/TNN/Economic Times/Live Mint/Marketwatch, 30-May-2011). The carrier is reducing capacity by between 10% and 20% through a mix of cancellations, mergers and capacity reductions. "This schedule has been put in place since Friday and will be implemented until June 15," he said. The further schedule will be drawn depending on how the situation unfolds over coming days. Air India had to cancel several domestic and international flights on 27-May-2011 after oil firms refused to provide fuel. Since Dec-2010, Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd have put the carrier on a cash-and-carry basis to acquire fuel, due to concerns over the carrier's ability to fund the purchase of jet fuel. Mr Rattan said Air India pays INR160 million (USD3.5 million) daily for fuel. GMR Infrastructure Ltd has also said it will withdraw Air India’s credit facility if dues are not paid by 01-Jun-2011. Meanwhile, Air India reported requested oil companies to provide discounts on aviation turbine fuel (ATF) on par with what is offered to private carriers. Air India has also reported proposed to fly executives of oil firms at concessional rates in lieu of a higher discount on fuel. 

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