Stay off layoffs, PMO tells private airlines

The Prime Minister's Office (PMO) has sent a communication to all the six private airlines in the country, asking them to avoid laying off any employee.
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The communication to the chairmen of these airlines comes at a time when India's airline companies are expected to make a combined loss of Rs 10,000 crore in fiscal 2009 - second only to the American aviation industry.

Confirming the receipt of the communication, a top official of a private airline said the PMO has said the bailout package offered by the government-owned oil marketing companies was meant to protect the interests of the employees and the airlines should therefore avoid layoffs. Another CEO of a leading airline said he has heard about the communication but has not seen the letter personally as he was travelling.

The letter was sent 10 days ago by the principal secretary to the prime minister TKA Nair. The communication followed a bailout package announced by the Indian government to help the private airlines tide over the current financial crisis. On October 22, the government had allowed airlines to clear fuel dues owed to the oil marketing companies, amounting to Rs 3,000 crore, in six equated monthly instalments (EMIs). The government has also extended the credit period for paying bills to 90 days against the current limit of 60 days.

Of the Rs 3,000 crore, Jet Airways owes Rs 1,057 crore to oil marketing companies, while Kingfisher Airlines has an outstanding of Rs 983 crore. The first instalment of the dues is expected by the oil companies on this weekend.

Thanks to a combination of high taxes, overcapacity and soaring oil prices, India's aviation sector finds itself facing a crisis. An analyst said these companies need to cut at least 8,000 jobs to remain afloat. Though Jet tried to lay off 2,000 employees in October, it had to hire them back after a nation-wide hue and cry.

The airlines are expecting the coming peak season in December to help them get passengers into empty aircraft. Passenger traffic in October was down by 13% to 3.1 million passenders as compared 3.6 million passengers flying in October 2007.