The financial health of airline carriers in India is sad despite the high growth rate of passengers. The approximate losses of airlines in the last financial year have been over Rs 10,000 crore.Nearly half of the debt is aircraft related and the rest is accounted for by working capital loans, dues to airport operators and fuel companies.
Ajit Singh, civil aviation minister, intends to take shot at these things, which experts believe can change the indian aviation sector.
1. Getting aviation turbine fuel (ATF) declared as notified product to bring transparency in its pricing and reduction of VAT on ATF by the States- This will bring down the tax from around 24% (currently) to 4%.
2. Development of low cost airports to keep the tariff at its minimal at smaller airports which in turn would help in making air travel affordable
3. Revisiting the policy regarding bilateral air service agreements with different countries and also rationalisation of all bilaterals and traffic entitlements on international routes to Indian carriers and rationalisation of traffic on domestic routes
With all these steps, Singh expects to that affordable connectivity to tier 2 and tier 3 cities can be there.Singh acknowledged in a ASSOCHAM conference that while there are number of structural factors that are responsible for this phenomenon, the operating cost environment is adversely impacting the financials of the airline sector.
Feather on cap of Ajit Singh since he took over as civil aviation minister (Things for which he is lauded widely)
1. Allowing 49% FDI by foreign airlines in Indian carriers
2. Allowing Indian carriers to import ATF
3. Allocation of traffic rights to domestic private carriers to fly on International routes
4. Creation of separate Air Accident Bureau for effective analysis of causes and taking corrective measures.
5. Steps taken to bring turnaround of Air India including equity infusion of Rs 30,000 crore till 2020-21, conversion of short term loans to long term loans and issue of Government guaranteed NCDs to raise funds.