With eyes on budget 2021, airlines seek govt help to fly again

The aviation industry demands include lowering air turbine fuel taxes (ATF), fiscal stimulus and reducing airport, parking, landing, navigation charges.

With eyes on budget 2021, airlines seek govt help to fly again
Aircraft at the Delhi airport. Image courtesy: Instagram/ atc.spotter

While the government is planning to open the sectors that contribute the most to the economy, experts believe that the policymakers have to give some space to the demands of these sectors in order to let them regain confidence in the post-pandemic world.

All eyes are on the Union budget 2021 and several sectors are putting forward their specific demands. The aviation sector – which was one of the worst affected sectors – wants the finance minister to take extra care of them.

The aviation industry seeks a number of helping steps from the government. Their list of demands include lowering air turbine fuel taxes (ATF) fiscal stimulus and reducing airport, parking, landing, navigation charges.

To begin with, the industry seeks rationalization of taxes. Kinjal Shah, vice president, ICRA, told Business Insider that the aviation industry's deteriorating financial health has raised tax sops' expectations to help reduce their high cost and debt burden, especially lowering taxes on ATF.

Also read: Indian airports may allow flyers to buy 4 litres of liquor

The ATF comprises nearly 30-40% of the total cost of an airline, and the prices in India are 45-50% higher, compared to international standard prices, she added. 

Besides this, the industry feels that regaining the travellers' trust as soon as possible will be vital for the much-needed revival.
The industry has also sought a reduction in other levies. The airport, parking, landing and navigation charges constitute a separate cost for the sector and the industry experts have asked for a reduction in the excessive levies along with other sops.

Also read: Why Indian carriers are not yet ready to fly at full pre-Covid capacity

The government introduced a fare price band capping the air travel ticket prices for airlines to a minimum, in order to avoid exploitation by airlines. However, ICRA now believes that it is time for the government to remove the price band and let the airlines decide the ticket prices.

Meanwhile, the economic survey, tabled before the parliament has found that most of the airlines based out of India are going to increase their fleet. It has been estimated that the total fleet could rise up to 713 by the end of the fiscal year.

The industry is surely beginning the new year on a positive note and full of hopes. Now, it will be interesting to see how far the government can help it in getting back to the pre-Covid strength.