Indian government unveils rescue plans for airlines

Feb 7, 2012, 12:44 GMT

New Delhi - A panel of federal ministers suggested Tuesday that ailing Indian airlines should be allowed to directly import jet fuel, and approved that foreign firms could own up to 49 per cent of carriers, media reported.

The panel led by Finance Minister Pranab Mukherjee also approved a debt restructuring plan for the state-run carrier Air India, IANS news agency reported.

The suggestions would soon be put before the federal cabinet for final approval, Aviation Minister Ajit Singh was quoted as saying.

The move to allow the cash-strapped carriers to directly import fuel instead of buying it from state-run oil distribution companies would allow them to avoid paying taxes and save them up to 30 per cent of the fuel cost, analysts said.

Five of India's six carriers posted losses in 2011. Jet fuel comprises about 50 per cent of their operating costs.

The airlines' share prices jumped on news of the decision, with Kingfisher Airlines' stocks rising by 13.20 per cent, Spicejet by 10.98 per cent and Jet Airways by 14.48 per cent.