Goyal proposes core sector

MUMBAI, NOV 25: The chairman of Rs 1,800-crore private airline Jet Airways, Naresh Goyal, has sought infrastructure status for the airlin...

MUMBAI, NOV 25: The chairman of Rs 1,800-crore private airline Jet Airways, Naresh Goyal, has sought infrastructure status for the airline industry in order to raise funds at cheaper rates, receive tax incentives and other concessions accorded to the core sector by the Union government. Investments in Indian airports are already considered as infrastructure but airlines have not been given any incentives.

The airline, which has invested a whopping 1 billion to set up India8217;s most profitable private airline, is completely depended on the international credit agencies for debt finance. 8220;Despite all the negatives, our airline has been able to raise funds from US Exim and other financial institutions at a rate which is as competitive as any other foreign airline. The loans were granted to the airline without a guarantee from the Indian government,8221; Goyal told this newspaper soon after relaunching its frequent flier programme here today.

8220;All over the world, airlines are considered a vital infrastructure to connect different parts of the country to promote trade and industry and tourism8230; Indian airline industry needs more incentives to grow and provide more accessibility to its passengers,8221; he said.

Goyal said in the forthcoming aviation policy, the government should provide a level playing field between the state-run airlines and private airlines. 8220;We have to pay far higher rate for aviation turbine fuel while foreign airlines and Air India pays lower rate for the same ATF in India8230; removal of these anomalies will help us to reduce costs and we can pass on the benefits to the passengers as reduced fares,8221; he said. 8220;As the margins in the airline industry is very low, granting of infrastructure status will improve bottomlines.8221;

The airline, with a fleet size of 25 Boeings, has envisaged yet another expansion of 10 aircraft at a cost of 500 million. 8220;The entire funds for expansion will be tied up with the foreign FIs and due to high interest rates prevailing in India we are avoiding debt from the domestic institutions, Goyal said. Ruling out the possibility of tapping the equity market, he said the company will look at the equity route only after improving its balance-sheet further. The airline is currently 100 per cent owned by an Overseas Corporate Body, an investment firm of the Goyals and the company does not disclose its net profit figures.

On the future outlook, Goyal said with installation of a stable government and a growing economy, the airline industry will show an improvement in performance from May-June next year.

Goyal said the fare discounts has hurt all the players in the industry as the cost of operations is very high while the margins are very thin. 8220;We are not against fare wars8230; but it should not be targeted to throw us out of business,8221; he added.

Top