SHOULD GOVERNMENT GIVE BAILOUT AIRLINES INDUTRY

AIRLINES

PACKAGE TO

The basic function of an airline is to accommodate for passengers and cargo while taking them to far-off places between two major cities or towns within a country or beyond geographical borders. Airline organizations can be classified into a number of segments depending on the nature and degree of services they provide. Major Indian carriers are pressing their feet on the accelerator to reach an acme of service level by the year 2010 when their fleet strength will meet 500 to 550. In the previous two years more than 135 aircrafts have been introduced to keep up with the increasing number of passenger traffic in Indian aerospace. A number of domestic airline groups have emerged in a reasonably short span of time to make the market furiously competitive. www.bestindiansites.com is your comprehensive guide to explore this industry which plays a pivotal role in India's continual growth as an economic power.

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The government is speeding up the bailout process for the airlines industry. According to official sources, senior officials from the mini stry of civil aviation and finance ministry are expected to meet next week to work out the modalities of the package. This high level meeting has been convened as the government is trying to work out a bailout package to prevent the civil aviation business from getting derailed. SundayET was the first to report on the development on September 14 that the government was planning a bailout package which is expected to give a relief of Rs 4,500-5,000 cr to all domestic carriers in the coming months. Over the last few months, all domestic airlines have been hiking fares and cutting capacity to tackle mounting losses. Besides, a base fare of Rs 1,000-1,500, airlines charge Rs 3,475 as fuel surcharge and taxes per ticket. In the last couple of months, the seat factor of almost all carriers fell sharply, with low-cost airlines such as Kingfisher Red (formerly Deccan) and SpiceJet being the worst affected. The sources pointed out that a reduction of even Rs 1,000 per kilolitre on jet fuel will translate into a saving of Rs 500 cr for the sector. They also pointed out that for the last three years, crude prices have registered a net increase of 17% while oil companies have passed on a net increase of 31.6% to the airlines. The government should fix a base price for ATF and a common distribution infrastructure. To sustain current levels of expansion in the sector, rationalising the taxes is the only key, said an official of a domestic airlines. DOMESTIC AIRLINES IN INDIA
In the recent past Indian civil aviation sector has grown manifold. The rapid growth of Indian economy has resulted in a spillover effect on the airline industry in India. Several new players have entered the industry and many more are about to enter the arena. The arrival of cheap airline carriers in India has spiced up the whole affair. Suddenly the air travel is no more the monopoly of the rich and the mighty. Now it has become a common mans vehicle and revolutionized the way a common Indian traveler used to travel. Here is a brief preview of domestic airlines in India. This includes private airlines as well as low cost airlines in India.

Here is a list of domestic airlines in India:

Air India Indian Airlines Jet Airways Air Sahara Kingfisher Airlines Air Deccan GoAir SpiceJet

WHY GOVERNMENT IS AGAINST THE BAILOUT PACKAGE? 1)The PMO is not inclined to view the demand of the airline industry for a mega-bailout

package favourably as it feels such a measure is not called for, given the overall numbers involved. Besides, it would set a precedent for similar rescue pleas from other sectors hit by the global financial whirlwind. 2)The demand for a bailout, put forward by the Federation of Indian Airlines, adds up to Rs 4,700 crore, or about $1 billion. Now, the job cuts at Jet Airways have seen the government being subjected to a fresh round of lobbying by industry. Aviation minister Praful Patel has also pushed the case of the private carriers, saying that if the sector is to be prevented from going into a tailspin, its financial demands have to be addressed. 3)Civil aviation minister Praful Patel has expressed disappointment that the finance and oil ministers had not been "sympathetic" to the sector's woes. He pointed out that the oil firms had been experiencing a very difficult patch and their finances were hardly in the pink of health. 4)Well-placed sources said the government believed that bailouts for the private sector airline industry would raise some policy issues. Already, two major airlines Jet and Kingfisher owe Rs 2,024 crore to state oil marketing firms. And if a package was prepared for the aviation sector, demands by other segments could not be ignored. It would be difficult to argue that the woes of a particular sector were more urge. WHY GOVERNMENT SHOULD LEND ITS SUPPORT? 1)Airlines industry is facing crisis which is looming large and is a threat for all the employees which are somehow related with the aforesaid industry.employees other than

the airline's 750-odd Indian pilots agreeing to take graded salary cuts to help keep the troubled airline afloat. 2)The pilots asked the management to give them a firm commitment on laying off the airline's 240-odd expatriate pilots, most of whom are commanders and receive salaries 50 per cent higher than their Indian counterparts. The expatriate pilots are employed on contract. 3)The airline had, however, laid off about 27 expatriate pilots who flew the 737 fleet a few weeks ago. The Jet management said it is prepared to meet the pilots again in the next few days for an amicable settlement, but does not rule out strong action if there is no agreement. 4) THE survival of the private sector is already going tough and if government is not going to

provide this remuneration to the airlines like JET AIRWAYS,KIGFISHER etc then it will lead to the collapse of these companies.the two giants have headed towards the merger but if the government went of this way then this will drastically affect the Indian economy.