At a time when airlines across the world are burdened with high costs due to rising fuel prices, the Ministry of Civil Aviation is working out a relief package to help Indian air operators cope with rising costs and the devaluing Indian rupee.
Civil aviation secretary RN Choubey Tuesday said that the ministry has held discussions with the finance ministry into the kind of support that can be provided to Indian carriers.
“We have had separate discussions with other ministries, including finance ministry, on what kind of support we can provide (to airlines) in view of the fact that there has been some deterioration on macro side relating to crude price and foreign exchange. A fall in rupee hits us badly as all our aircraft leases are on dollar term. And our operating costs are hit by rise in fuel price. I am unable to give exact details right now because it is work in progress. But, we are in discussions with ministry of finance regarding this,” Choubey said on the sidelines of the International Aviation Summit organised by the International Air Transport Association here.
When asked about the details of the relief package, Choubey said: “I am unable to share the details of the relief package at this stage but it would be relief on the financial side, on the cost side. That’s the intention. The intention should be that the costs should be brought down. They have gone up largely because of two things — the crude oil prices going up and the devaluation of the Indian rupee. So the intention of the government is to bring down costs by giving a cost relief”.
He added that the civil aviation ministry was continuously pushing for inclusion of aviation turbine fuel, which comprises almost 30-40 per cent of an airline’s total costs in India, in the GST regime. Currently, airlines pay GST on tickets but are unable to claim credit due to non-inclusion of jet fuel in the ambit of the indirect tax regime. IATA’s director general Alexandre de Juniac also said Tuesday that by charging GST on international tickets, India was violating its international obligations.
“We have long made our case that applying GST to international tickets violates ICAO (International Civil Aviation Organization) principles and India’s international obligations. These deviation from global standards may have a short-term revenue benefit for the government. But it weakens India’s competitiveness by raising the cost of connectivity. And, in its current form, airlines continue to face many compliance challenges,” de Juniac said.
For the first quarter of the ongoing financial year 2018-19, Indian airlines have faced financial turbulence with country’s largest airline IndiGo witnessing a drop of 97 per cent in its net profit to Rs 28 crore, the second largest airline Jet Airways reporting a loss of Rs 1,323 crore, while the second largest budget carrier SpiceJet posting a loss of Rs 38 crore. Most airlines have seen a drop in their yields due to no upward revision in fares despite the rising fuel costs.