Aviation min draws up relief plan for loss-making airlines

According to sources, the various proposals that have been floated include looking at capping minimum and maximum fares an airline can charge on a certain route

The aviation ministry is learnt to have drawn up a relief plan for loss-making airlines, sources tell CNBC-TV18, adding that series of proposals are being readied for submission to the PMO. 

According to sources, the ministry is mulling a series of steps for financial relief to all loss-making airlines and not just SpiceJet . The various proposals that have been floated include looking at capping minimum and maximum fares an airline can charge on a certain route, depending on the segment it caters to -- full-service or low-cost.

Under the proposal, airlines may be allowed to add 5 percent as "margin" while fixing the base price or minimum fare, whereas they may have a cap of Rs 15,000 as maximum fare. Moreover, all airlines could be asked to submit break-even cost per kilometer.

The ministry is also learnt to have asked for 'infrastructure' status for all airlines, already enjoyed by airports. Infra status would mean airlines will get access to cheaper funds. It would also allow them to go for external commercial borrowings with lower interest rates and may give a complete income tax exemption for a fixed period.

The ministry may also ask banks to cap interest on borrowings by airlines at 8 percent and reschedule payment of dues to oil companies.

However, all these proposals are at discussion level only and are still to be presented before the PMO, which will take a call.

SpiceJet stock price

On December 10, 2014, SpiceJet closed at Rs 13.20, up Rs 0.05, or 0.38 percent. The 52-week high of the share was Rs 22.20 and the 52-week low was Rs 11.10.

The latest book value of the company is Rs -16.49 per share. At current value, the price-to-book value of the company was -0.80.

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