NEW DELHI: Alarm bells are ringing in the airline industry with the pandemic crippling traveller numbers and no real relief in sight from the government on price of jet fuel — which in India is among the costliest globally for domestic flights — and indirect taxes.
The CEO of India’s biggest airline, IndiGo’s Ronojoy Dutta on Wednesday minced no words in calling India’s airline industry “chronically ill” and has sought immediate life-saving relief.
He has termed it an “unreasonable proposition to expect that the industry should earn a 21% margin just to pay taxes to the government.”
According to rating agency Crisil, Indian carriers this fiscal could end up with a record high collective loss of Rs 20,000 crore.
“Civil aviation provides efficient infrastructure, critical for economic growth and employment in our country. Yet civil aviation pays 21% of its revenues to the government in indirect taxes with very little input credit. It is an unreasonable proposition to expect that the industry should earn a 21% margin just to pay taxes to the government. This unreasonable proposition is resulting in an industry that is chronically ill and is unable to live up to its true potential of boosting commerce and employment,” Dutta says.
“We would request the finance ministry to take some immediate action to address this long festering problem. Central excise taxes on fuel should be reduced from 11% to 5%, ATF should be brought under the GST, custom duties on repair parts should be eliminated. A rationalisation of taxes will result in explosive growth for aviation, which will have multiplier effects throughout the economy, stimulating commerce and employment and integrating the different regions of our diverse country closer together,” he added.
For nearly two decades now the issue of high aviation turbine fuel (ATF) pricing in India had remained unresolved.
Industry insiders say the problem gets compounded for two reasons — high base prices with oil companies disproportionately raising ATF price each time crude basket gets more expensive as a means of cross-subsidising politically sensitive petrol, diesel, kerosene and gas. Then high taxes, both central and state, make this anyway costly ATF even pricier.
For years states and Centre pass the buck on each other for cutting taxes. “Unless Delhi, Mumbai and some big metros cut ATF price, we won’t get any real relief in operating cost,” said an industry insider.
The CEO of India’s biggest airline, IndiGo’s Ronojoy Dutta on Wednesday minced no words in calling India’s airline industry “chronically ill” and has sought immediate life-saving relief.
He has termed it an “unreasonable proposition to expect that the industry should earn a 21% margin just to pay taxes to the government.”
According to rating agency Crisil, Indian carriers this fiscal could end up with a record high collective loss of Rs 20,000 crore.
“Civil aviation provides efficient infrastructure, critical for economic growth and employment in our country. Yet civil aviation pays 21% of its revenues to the government in indirect taxes with very little input credit. It is an unreasonable proposition to expect that the industry should earn a 21% margin just to pay taxes to the government. This unreasonable proposition is resulting in an industry that is chronically ill and is unable to live up to its true potential of boosting commerce and employment,” Dutta says.
“We would request the finance ministry to take some immediate action to address this long festering problem. Central excise taxes on fuel should be reduced from 11% to 5%, ATF should be brought under the GST, custom duties on repair parts should be eliminated. A rationalisation of taxes will result in explosive growth for aviation, which will have multiplier effects throughout the economy, stimulating commerce and employment and integrating the different regions of our diverse country closer together,” he added.
For nearly two decades now the issue of high aviation turbine fuel (ATF) pricing in India had remained unresolved.
Industry insiders say the problem gets compounded for two reasons — high base prices with oil companies disproportionately raising ATF price each time crude basket gets more expensive as a means of cross-subsidising politically sensitive petrol, diesel, kerosene and gas. Then high taxes, both central and state, make this anyway costly ATF even pricier.
For years states and Centre pass the buck on each other for cutting taxes. “Unless Delhi, Mumbai and some big metros cut ATF price, we won’t get any real relief in operating cost,” said an industry insider.
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