Ahead of briefing to PM Narendra Modi, secy calls aviation co CEOs meet; Spicejet, Jet Airways want infra push

Written by Roudra Bhattacharya | New Delhi | Updated: Jun 10 2014, 15:44pm hrs
Union civil aviation secretary Ashok Lavasa has called a meeting over 30 CEOs from across airlines, airports, ground handling and maintenance, repair and overhaul (MRO) firms on Tuesday.

With the civil aviation ministry expected to make a presentation on the sector to the Prime Minister Narendra Modi soon, the ministry is seeking suggestions from the industry that will help put the aviation sector back on the growth track after dismal performance of the past few years.

Around 30-40 company officials have been invited. It will largely be a pre-Budget discussion, a ministry official said.

An industry executive said, The meeting is at a very short notice and was announced just a day ago without any notice. It is supposed to start at 11 in the morning, but I believe many company officials may not be able to attend.

Among the major issues likely to be discussed are a uniform reduction in taxes on fuel (ATF) across the states that has been sought by airlines in order to improve their profitability. Currently, VAT on ATF is around 28-33% in most states, though a few states like Chhatisgarh, Jharkhand and West bengal offer a lower 4% VAT rate.

This is critical to the industry as fuel costs account for half of the total expenditure for airlines.

Among other issues, the industry is seeking lower taxes on local MRO facilities that will encourage more firms to invest in building such aircraft workshops in India and, thereby, create more jobs. Currently, most airlines take aircraft to Singapore, Dubai, Europe and even Sri Lanka for major MRO work.

The industry will also seek rapid improvements in regional connectivity through airport modernisation and possibly an increase of the FDI cap in airlines from 49% to 100%. The latter will help most loss-making domestic carriers like Spicejet and Jet Airways seek more funds overseas to turn around operations. In FY14, Spicejet, Jet and Air India had posted losses of Rs 1,003 crore, Rs 3,667 crore and Rs 5,400 crore, respectively.