Budget 2022: Aviation industry looked for relief, but got e-passports instead

Ajay AwtaneyUpdated: Tuesday, February 01, 2022, 07:34 PM IST
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Airlines have been asking for a reduction in costs to keep their head above water, but to no avail./Nirmala Sitharaman ./ Representative image | File photo

Continuously battered by the COVID-19 pandemic over the past couple of years, the aviation industry was hoping, yet again, for some support from the Budget for 2022-23. What they got was e-passports, instead.

As a part of the expenditure in the year 2021-22, an amount of Rs 51,971 crore has been laid out towards the settlement of the outstanding guaranteed liabilities of Air India by the Government of India. This includes all sorts of debts that were not taken over by the Tata Group and were still to be paid off by the Government of India.

For FY23, Rs 9,259 have been allocated to AI Asset Holdings Limited for servicing the loans transferred to the SPV due to the financial restructuring of Air India. An amount of Rs 165 crores has been earmarked for the medical benefits of retired Air India employees.

The regional connectivity scheme UDAN, which provides viability gap funding to airlines in exchange for flying on non-serviced routes, has also seen its amount reduced from Rs 994 crores in FY22 to Rs 600 crores in FY23. However, the rest of the aviation ecosystem has been left to fend to itself.

No details on airports and PM Gati Shakti program

The Finance Minister mentioned that airports would power the economic growth as a part of the PM Gati Shakti programme. However, he did not lay out either details on how this would be achieved, or the timelines.

Airlines have been asking for a reduction in costs to keep their head above water, but to no avail. While the Government of India cannot unilaterally bring Aviation Turbine Fuel (ATF) under the ambit of GST, it can cut or eliminate the excise duty charged on ATF, which is as high as 11 percent. However, the sector has seen an increase in the price of ATF on February 1, 2022 by 8.5 percent keeping in line with prices inching up of crude oil.

No mention about cut in airport charges, customs duty

A major request has been to look at a cut in the charges payable for airport landing, parking, and navigation to the Airports Authority of India. Another demand has been to take a relook at the customs duty and IGST charged on parts sent abroad for repair and come back. None of these found any mention in the finance minister’s speech.

Missed opportunity for aviation sector

Pre-Budget, IndiGo’s CEO Ronojoy Dutta had remarked about how Civil Aviation operators pay 21 percent of their revenue to the government as indirect taxes, resulting in a chronically ill aviation industry. He continues to be disappointed. After the Budget, he remarked, “We were expecting tax concession to Aviation industry in the forms of cut in ATF excise duty and allocation of concessional finance to airlines to help us come out of the pandemic.”

This is a missed opportunity in terms of the aviation sector as a whole because the industry is vital for the growth of the Indian economy, and is being treated as a luxury sector rather than an infrastructure sector during these times of headwinds for the industry.

(The author writes about Indian aviation on livefromalounge.com and tweets from @LiveFromALounge)

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