Public sector oil companies demand upfront payment as dues mount

With state-owned oil marketing companies refusing to supply aviation turbine fuel (ATF) to Air India and Air India Express till they start paying for it upfront, the airlines cancelled four flights, domestic and international, in Kerala on Friday.

Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation had put the carriers on notice following mounting dues. The outstandings stand at over Rs. 2,400 crore, including Rs. 400 crore in interest, according to the oil firms.

Air India operates nearly 320 flights on the domestic and international sectors daily.

An Air India spokesperson in New Delhi said the situation was back to normal by afternoon, but reports from Kochi indicated that the uncertainty may persist.

“We've reached an understanding. We expect further relief as the Civil Aviation Ministry has been apprised,” one official said.

The oil firms had asked cash-strapped Air India to prepare a schedule to clear the dues and pay upfront for future purchases. Air India's daily average ATF bill has been about Rs. 18 crore during the past few months.

PTI reports:

The oil PSUs said they would restrict the supply of jet fuel and the operators of the Delhi and Hyderabad airports asked Air India to pay up the dues by June 1.

The GMR-led Delhi International Airport Limited and Hyderabad International Airport Limited said Air India would be allowed to operate its flights “only on the cash-and-carry basis” from the midnight of June 1.

Air India owes Rs. 217.08 crore to the Delhi airport and Rs. 35.89 crore to the Hyderabad airport on account on airport handling charges, including aeronautical charges.

Two GMR-led joint ventures also put Kingfisher Airlines on notice.