India's Aviation Sector Seeks Relief in Upcoming Budget

The Indian domestic airline sector has begun to show signs of recovery, with companies witnessing a rise in profits for the first time in three years. However, the industry is still burdened with a collective debt of over `60,000 crore. To address these concerns, the sector has presented a wish-list to the finance minister, including tax reliefs, a debt restructuring plan, and liberalization of foreign direct investment (FDI) in aviation. The industry also seeks to have aviation fuel classified as 'declared goods' to reduce tax rates, which currently stand at around 24-25 per cent, and account for over 40 per cent of airlines' operational cost.

Key Takeaways:

• The Indian domestic airline sector is facing a collective debt of over `60,000 crore and is seeking a debt restructuring plan from the government.
• The sector is also seeking tax reliefs and liberalization of foreign direct investment (FDI) in aviation to improve its financial health.
• Aviation fuel accounts for over 40 per cent of airlines' operational cost, and the industry seeks to have it classified as 'declared goods' to reduce tax rates.
• The government is being urged to provide fogproof equipment at airports and implement a special budgetary provision to avoid heavy losses incurred by airlines during foggy winters.
• The industry also seeks exclusive viability gap funding mechanisms for encouraging private investment in regional airports.
• Airport developer Airports Authority of India (AAI) has sought more funds to meet the immediate need for developing airports to keep pace with sector developments.
• India allows 100 per cent FDI in almost all mass rapid transport systems, but foreign ownership in airlines is restricted to 49 per cent, limiting resources and potentially leading to an investment gap.
• Aviation fuel prices have been hiked by 4.5 per cent, putting further pressure on airlines and resulting in increased airfare.
• Regional aviation needs to be promoted aggressively, as many airlines are ready to launch regional carriers but lack developed airports.

Statistics:

• Collective debt of Indian domestic airlines: over `60,000 crore
• Tax rates on aviation fuel: around 24-25 per cent
• Aviation fuel's share of airlines' operational cost: over 40 per cent
• Increase in airfare due to aviation fuel price hike: Not specified
• Number of airlines ready to launch regional carriers: Many, but not specified

Sources:

• "India allows 100 per cent FDI in almost all mass rapid transport systems. However, foreign ownership in airlines is restricted to 49 per cent and nil investment in Indian carriers." - Ankur Bhatia, Bird Group
• "We hope the government terms ATF (aviation turbine fuel or aviation fuel) as 'declared goods', as it will help reduce the tax rates from the current levels of around 24-25 per cent." - Ankur Bhatia, Bird Group
• "Also, regional aviation needs to be promoted aggressively. A number of airlines are ready to take off their regional carriers from many parts of the country, but lack of developed airports is blocking the growth." - Ankur Bhatia, Bird Group
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