The three state-owned oil companies had stopped the supply of jet fuel or ATF supplies to the airline at Mohali, Patna, Kochi, Vizag, Pune, and Ranchi due non-payments of bills
Fuel supply cut by Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum to the national carrier Air India on Thursday at six airports due to pending fuel bills by almost eight months is because of an ‘overall lack of adequate funds’, according to Air India chairman and managing director Ashwani Lohani even as it doesn’t reflect on the operational performance and recent efforts of the airline in any way, Lohani said in a statement.
The three state-owned oil companies had stopped the supply of jet fuel or ATF supplies to the airline at Mohali, Patna, Kochi, Vizag, Pune, and Ranchi due non-payments of bills, IANS reported. The decision by the three firms was taken “in the wake of long-overdue payments to the tune of Rs 5,000 crore,” an IOC statement said on behalf of the three firms. The pending dues include the interest accrued on the outstanding dues.
Lohani said that the huge debt servicing impacts every single aspect of the working of the airline, and to expect it to service from its revenues, partial yet huge debt indicates a lack of appreciation of working of airlines and also the ground realities facing Air India. Despite this, the airline needs to “fly high come what may,” Lohani added.
IOC said that the credit period stood at 230 days as Air India didn’t pay even as it has a 90-day credit period that allows the airline to pay for the fuel purchased on a given day in three months. It added in the statement that due to the outstanding bill, oil marketing companies have been ‘constrained’ to cut fuel supply to Air India and Alliance Air flights at six airports from the evening of August 22, 2019.
Air India uplifts around 250 kilolitres of jet fuel at the six airports on a daily basis and post-suspension of fuel, the airline was tanking up its flights (operating from the six airports) from other airports. Senior officials at IOC earlier in the day said that Air India had offered Rs 60 crore payment which was “a drop in the ocean” vis-a-vis the amount airline has to pay to the three companies. The debt for Air India stands at more than Rs 58,000 crore.