Problems may not be new for the Indian airlines. But, today, they got an opportunity to raise those at the highest level of the government.
Top executives of all the airlines, excluding Air India, discussed their problems with Prime Minister Manmohan Singh, who acknowledged the issues, saying he would take those up with the authorities concerned.
In a meeting held this morning, the airlines mentioned high tax on aviation turbine fuel (ATF), high airport charges, permission to fly on international routes and the ground handling policy as key concerns. Allowing foreign airlines to buy stake in Indian carriers was not discussed in this meeting.
“We raised our problems about high taxes on fuel, higher airport charges and allowing Indian carriers to fly international. The prime minister patiently listened and said he would discuss these issues with the civil aviation and finance ministries,” said an airline official present at the meeting, requesting not to be identified.
From the airlines’ side, Jet Airways Chairman Naresh Goyal, IndiGo Co-founder Rahul Bhatia and President Aditya Ghosh, GoAir Chairman Jeh Wadia, SpiceJet Chief Executive Officer Neil Mills and Kingfisher Airlines Chief Executive Officer Sanjay Agarwal attended the meeting. Kingfisher Airlines Chairman Vijay Mallya was not present.
The major concern for the airlines was high tax on ATF, which now constitutes around 50 per cent of their total operating cost, compared to 40 per cent six months back.
The average tax charged by states on ATF in India, at 24 per cent, is the second-highest in the world, next only to Bangladesh’s 27 per cent. The airline companies have been demanding that ATF be brought under the capital goods category. That would fix the taxes on ATF at four per cent.
Earlier, the attempt by the government to convince states to reduce tax on the fuel had drawn stiff resistance, with states demanding the Centre compensate them. “The states charge tax on ATF and want the Centre to compensate in case of a rollback,” a senior civil aviation ministry official said.
Two low-cost carriers, SpiceJet and IndiGo, recently started flying on international routes and plan to expand. But this has been delayed due to lack of approvals.
The civil aviation ministry has not approved their international expansion due to objections from Air India. The national carrier wants the government to go slow on allowing both Indian and foreign carriers to fly international.
“We asked the PM to allow the carriers to fly international. The expansion plans have been on hold. International operations will help increase our revenues,” said the official. SpiceJet has applied to fly to Commonwealth of Independent States (CIS) Countries and IndiGo has applied for a number of destinations in West Asia.
The issue of high airport charges also found a mention in the meeting. The private airport operators of Delhi and Mumbai have applied for an over 500 per cent increase in charges. The airlines also sought the prime minister’s intervention for resolution of the ground-handling policy issue. At present all airlines have their own ground handling staff. But the policy aims to limit the number of ground handlers to three at six major airports — Delhi, Mumbai, Kolkata, Chennai, Bangalore and Hyderabad.
Of the three ground handlers, one will be Air India, jointly with the Singapore Airport Terminal Services; and another, the airport operator, in alliance with a ground handling partner. The third handler has to be chosen through competitive bidding. The Indian aviation industry has been facing a host of problems, contributed mainly by high operational costs and rupee depreciation. Three listed carriers — SpiceJet, Kingfisher and Jet Airways — announced a collective loss of around Rs 1,500 crore in the second quarter of the current financial year.
