Oil Companies Almost Cut Off Fuel Supply to Air India

Debt ridden Air India nearly faced a fresh wave of disruption today, as oil companies in the country proceeded to suspend the supply of all aviation fuel to the Indian national carrier, due to payment dues yet to be cleared.

Air India has survived for years with the constant help of taxpayer money, and is now asking the Indian government for 21.21 billion rupees ($286.3 million) in additional equity to pay the carrier’s bills to vendors.

Local media are reporting that fuel supply for all Air India’s domestic flights was prepared to be suspended from eight locations in the country: Mohali, Patna, Pune , Trivandrum, Lucknow, Vishakhapatnam, Coimbatore and Jaipur.

However, a last-minute ‘part payment’ from the carrier has reportedly prevented the oil companies from completely suspending fuel supply to all of Air India’s group airline carriers, Air India officials have now confirmed.

The Indian flag carrier has defaulted on recent payments to oil companies, and owes a total of $675 million, and has been paying a daily sum of $2.7 million.

Oil companies say the daily amounts paid by Air India have reportedly been ‘erratic’ – leading to an oil suspension that would have been effective from approximately 16:00 local time, today.

Final Thought

Developments surrounding the future of Air India change at a very fast rate. Today, the airline narrowly avoided a complete melt-down to its domestic services.

The government has so far proven unsuccessful in its efforts to sell the airline, and it is yet to introduce more funds (as per its agreed schedule) causing disruption to the airlines’ daily operations, given its struggle to pay domestic and international suppliers.

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