Air India constitutes over 80% of dues to Airports Authority of India

by Devesh Agarwal

Air India is well known for receiving thousands of crores of tax-payer rupees in bailouts, however, the unfettered largesse to the beleaguered national carrier does not end there. The airline is the constant recipient of indirect dole in the form of huge overdues to state-run service providers like the Airports Authority of India which runs most of the airports in India, and the state-owned oil marketing companies like Indian Oil which sell aviation fuel.

While these entities are quick to put private carriers on a "cash and carry" basis if they default, Air India is given a free run of their resources.

Airlines' dues to AAI as of 31-Mar-2013

Last week, Minister of state in the ministry of civil aviation, Mr. K.C. Venugopal informed the Lok Sabha (the lower house of the Indian parliament) on the dues of airlines to the Airports Authority of India. The statement says

AAI takes adequate efforts to recover the dues by regular monitoring. Action is also taken as per the approved credit policy of AAI. Defaulting companies have to pay interest as per AAI Credit Policy on delayed payments. In cases where delay persists, besides encashing the Security Deposit, the defaulting airlines are put on 'Cash and Carry Basis'. Interest @ 12% per annum is charged in respect of traffic dues. Interest on non-traffic dues is charged as per terms and conditions of the agreement which could be either 18% or 12%.

With about 19% of domestic market share, Air India's dues of Rs. 1,539.75 crores, constitutes over 80% of the total dues, while leader IndiGo, whose market share is almost 30%, owes just Rs. 2.89 crore or 0.15% of the authority's total dues.

In March, Minister of state for petroleum and natural gas Ms. Panabaaka Lakshmi informed the Lok Sabha, Air India owes state-owned oil companies Rs. 4,324 crore in outstanding fuel bills as on February 28, 2013. This is more than three times all the other domestic carriers combined.

It will be interesting to see the details on the Interest being charged to Air India, and why they are not being put on a cash and carry system.

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Scamster makes 389% profit margin selling official travel tickets to Members of Parliament

by Devesh Agarwal

A ticket bought for Rs. 17,270 was sold to the Rajya Sabha secretariat for Rs. 67,270, a 389% mark-up!!

We regularly hear either the Minister of Civil Aviation, Mr. Ajit Singh, or the Director General of Civil Aviation, Mr. Mishra, calling for airlines to curb their fares and not indulge in price gouging.

One has to wonder what will be their reaction to this news report by Saurabh Sinha in the Times of India. The Rajya Sabha (the upper house of the Indian parliament) secretariat was informed of a potential scam when a RS Member of Parliament (MP) found some extreme prices on his air ticket and lodged a formal complaint.

The secretariat paid Rs 99,292 for a one-way Delhi-Chennai flight on Jet Airways for Ashk Ali Tak, a Congress RS member from Rajasthan. A Chennai-Hyderabad ticket on Air India was bought for Rs 35,184. A Hyderabad-Bangalore journey on Jet and a Bangalore-Jaipur ticket on low cost IndiGo 'cost' Rs 67,270 and Rs 17,270, respectively.

The DGCA, on investigating with the various airlines, found

"Jet Airways said it got Rs 39,292 from the agent for the Delhi-Chennai ticket which was sold to the RS Secretariat by the latter for a whopping for Rs 99,292; and Rs 17,270 for the Hyderabad-Bangalore ticket that was 'bought' for Rs 67,270. AI said it got Rs 4,484 for the Chennai-Hyderabad ticket which was bought for Rs 35,184. IndiGo said it got Rs 8,910 for the Bangalore-Jaipur ticket that was bought for Rs 38,410,"

A 300% mark-up!!! on business class fares? All on the tax-payers' Rupees??

Why is the Government going to private ticket agents, when it has a fully owned and well functioning on-line travel agent (OTA) called Indian Railway Catering and Tourism Corporation (IRCTC), which also sells flight tickets?

And while we are on the question of fares, why is the RS MP flying Business Class on yours and my Rupees? That too at a time of the government raising prices and taxes to improve its collections?

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