FIA demands slew of measures to boost aviation sector

Demanding a slew of measures in the Union Budget including reduction of taxes and continuation of the existing norms for starting international operations, the airline industry has said such steps will give a boost to the ailing sector.

"The government policy of 5/20 criteria (five years domestic operations and 20 plane in the fleet) to start international routes as stated in the 2009 guidelines should continue and no change should be permitted or made to this rule," the Federation of Indian Airlines (FIA) said in its submission on budget demands to the Finance Ministry recently.

The FIA, which is the umbrella organisation of the domestic airlines, has also called for seting up a dedicated fund for scheduled airlines.

Such a corpus would help the airlines in availing long-term loans for aircraft purchase at low-cost interest for a greater maturity period, it said.

Besides, reducing the high interest outgo, this measure will also help the airlines in avoiding external commercial borrowing route for fund raising, the FIA said.

The federation represents four major airlines - Jet Airways, IndiGo, SpiceJet and GoAir. Newly launched Vistara and Malaysian carrier AirAsia's subsidiary AirAsia India are not part of this grouping.

National carrier Air India, which was a member earlier, however, opted out of the lobby group last year.

"The government had earlier exempted the aircraft/engine lease rental payments and obligation arising out of the lease agreements with the foreign lessors but withdrew these after April 2007 and imposed withholding tax. This should be reinstated," the FIA stated.

Besides these, it has also sought other relaxations in both central and state taxes including the taxes on jet fuel.

The FIA has sought lowering charges at Delhi and Mumbai airports while underlining its long-pending demand of declaring the airline industry as a "core" infrastructure industry, a status given to other sectors such as power, coal, telecom and oil and gas.

It has asked for rationalisation of various taxes and called for bringing in jet fuel in the "declared goods" category, besides restoration of 'Served From India Scheme' benefits to the airline sector.

"This benefit has been taken away from the aviation sector since January 2011. Earlier, SFIS scrips were being used by the aviation companies against import of aircraft-related parts and with the removal the companies now needs to pay customs duty on these parts which increase the maintenance costs. There is need to restore these benefits as well," it said.