23.6.14

Aviation snippets



The civil aviation sector is on the verge of collapse with accumulated losses of Rs.49,000 crore and needs an urgent boost to prevent more Kingfisher-type meltdowns and job losses, Prime Minister Narendra Modi was told on Saturday.
The review meeting saw civil aviation minister Ashok Gajapathi Raju pointing out that poor returns from airports, burgeoning costs and a tax structure that hurt Indian maintenance, repair and overhaul industry was burying the sector under debt.
Raju is understood to have compared the situation with what the telecom sector faced in 1999 before the then Vajpayee government worked out a rescue package that allowed mobile service providers to move from fixed fees to revenue sharing.
The ministry stressed on the potential of the MRO industry generating large revenues and enhancing employment if service tax and VAT structures were made more attractive. The current rates make India a 35% more expensive destination for MRO operations than countries like Singapore.Tweaking tax rates can give employment to skilled hands and bring business to India while there was little revenue in the current circumstances.
Unsurprisingly, Air India contributes a staggering Rs.30,000 crore to the accumulated Rs.49,000 crore losses in the civil aviation sector and the ministry outlined the need for a credible, resultoriented capital infusion plan. Raju stressed that there should not be any more Kingfishers and job losses, he said indicating the fragile financials of several private operators.
The meeting also saw industry grouses like high taxes on aviation fuel that are seen to make domestic air travel more expensive and vulnerable to price shocks.

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