FM Let ‘em Fly Cheap

The Union Minister for Civil Aviation, Praful Patel is leaving no stone unturned to improve the aviation industry of India. He took the initiative to revamp the airports and make them at par with the best airports around the world. He is also keen on building airports in smaller towns and cities and has also been trying to keep air travel affordable for the common man. He has sent his wish-list for the upcoming budget to FM.

Praful Patel has requested the Finance Minister P Chidambaram to rationalise aviation tax structure, decrease sales tax levied on aviation turbine fuel (ATF) and do away with service tax on business and first-class tickets for Indian international carriers.

In a pre-Budget meeting with the finance minister, Patel also sought the extension of the tax rebate given to national carrier Air India to help its consolidation process. ATF accounts for 45 per cent of an airline’s operating cost and the sales tax levied on it by the State Government ranges up to 35 per cent in some cases.

The Federation of Indian Airlines (FIA) has asked for private airlines to be brought on the same platform as the public sector carriers in terms of setting off previous losses against future profits in case of amalgamation or merger. The change would greatly benefit recently the merged carriers, Kingfisher and AirDeccan, which had incurred huge losses last year. Also, the federation reiterated last year’s demand of doing away with fringe benefit tax, which is levied on crew or passenger accommodation in case of delays, food catering services etc.

Patel is also taking up issues like reducing sales tax for ATF and is asking for larger participation of the States for infrastructure development across the country.

Recently there were reports that the low cost carriers are going to increase there fares leaving them beyond the approach of the common man. But this request of our aviation minister does bring a smile on the faces of the common man.

On the infrastructure front there has been keen interest developed by private players both nationally and internationally who promise to invest huge amounts of money in developing aviation infrastructure. The Government has already working with some of the private players in the revamp exercise successfully. This public-private relationship makes the whole industry self sustainable and does not require much funding by the Government. Patel as such has not demanded any major outlay for his ministry thus setting an example to other state-controlled industries to develop such frameworks where the development projects are self sustainable.

I would myself wish that the hefty taxes on airfares should be reduced at least for the low-cost carriers flying domestic and beyond. Cut or no-cut on taxes for luxury air travel hardly makes a difference for the elite class but for the middle class it means a major difference.

Namit Agarwal