Industry hails draft aviation policy

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Mumbai | Published: October 31, 2015 12:21:35 AM

The aviation fraternity hailed several proposals, particularly pertaining to building of no-frills airports, tax exemptions for maintenance & repairs

The draft aviation policy, which was unveiled by the government on Friday, was broadly welcomed by the aviation industry officials. The aviation fraternity hailed several proposals, particularly pertaining to building of no-frills airport, tax exemptions for maintenance, repairs and operations sector and efforts to encourage middle class Indians towards air travel.

SpiceJet promoter and chairman Ajay Singh said: “The government has focused on regional connectivity and we have been a proponent of that for a long time but we do not agree with the capping of prices at R2,500. Exempting MRO’s from certain taxes is also encouraging.”

Hailing the government’s move Indigo Airlines president Aditya Ghosh said: “Lowering taxes on the MRO sector will help reduce the input cost of running an airline. Government’s initiative in promoting low-cost airports will help in the penetration in domestic market,” said Aditya Ghosh, president, Indigo Airlines. Similarly, Vistara CEO Phee Teik Yeoh said: “We applaud the ministry of civil aviation for being proactive and prompt in putting together a slew of recommendations to tackle the known issues that have been plaguing the aviation industry.”

On the contentious 5/20 rule, where there’s no clarity in the draft policy as it just lists the options, there were some disappointments by the new carriers. “The 5/20 rule should be scrapped immediately as it is an impediment to growth for all the new players in the domestic market,” said Vistara’s Yeoh.

Seconding Yeoh’s statement, AirAsia CEO & MD Mittu Chandilya, said: “Removal of this rule would have sent a clear message on a progressive aviation policy”.

Though the levy of 2% cess could raise ticket prices on most of the domestic and international routes, industry veterans played it down stating that if benefits accrue such issues would get squared of. For instance, SpiceJet’s Singh said imposition of cess would not be making a “big difference” in airfares as it would help in improving regional connectivity. Similarly, IndiGo’s Ghosh said that if the proposal to charge 2% levy is seen in isolation, then airfares would rise. “At the same time, if the money collected from cess is invested back in the airport infrastructure like air traffic management and ground handling, then we will definitely see fares coming down,” Ghosh said.

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