In wake of fund-crisis due to complete shutdown of the aviation sector, Airports Authority of India (AAI) has suspended overdraft limits of airports and all other field stations with immediate effect. The statutory body, working under the Ministry of Civil Aviation, has also put on hold all vendor payments, including project payments, with immediate effect.
"During the ongoing nationwide lock down due to COVID-19 pandemic and total shut down of the aviation sector, the generation of revenue and revenue realisations of AAI from traffic and non-traffic services have been severely impacted and stalled," according to a circular issued by the airports authority on Sunday.
Considerable cash reserves in the form of term deposits have been utilised till date to maintain flow of funds to meet salaries, utility payments, statutory payments, vendor payments and project payments, AAI said.
"As on date, the fund position is very critical. Till alternate arrangements are made for making funds available, all regional and corporate headquarters of AAI are directed to immediately suspend overdraft limits of airports and all other field stations under the respective regional headquarter (RHQ) linked with State Bank of India, HDFC Bank, Vijaya Bank," it said.
"All vendor payments including project payments are put on hold with immediate effect," AAI said, adding that the payments will be released only after fresh communication from its corporate headquarters in this regard.
Only payments under clean Letter of Credit (LC) are to be processed on priority as AAI is legally bound to release such payments as per the RBI and International Guidelines in this regard, it said.
The payment, however, will be released after getting approval from General Manager (Finance)-Pre-check-corporate headquarter (CHQ) in the event of purchase of USD/EURO due to non-availability of sufficient dollar funds in AAI EEFC (Exchange Earners' Foreign Currency) Account.
The GM (Finance) at RHQ will be the nodal fund managing authority for monitoring, prioritising and approving release of payments by the field stations of their region under their control, it said.
No unit will incur any expenditure without the approval of GM (F) at respective RHQs, it added.
According to a CRISIL report, domestic aviation industry will crash-land this fiscal (FY21) with revenue loss of Rs 24,000-25,000 crore due to the extension of lockdown. Airlines will be the worst-affected, contributing more than 70% of the losses, or nearly Rs 17,000 crore, followed by airport operators with Rs 5,000-5,500 crore, and airport retailers (including retail, food and beverages and duty-free) with Rs 1,700-1,800 crore, the report said.
CRISIL warned that the losses will climb if travel restrictions last longer in hubs such as Mumbai, Delhi, Chennai and Kolkata.