New Head, Old Challenges

The country has a new government and a new Minister for Civil Aviation in Hardeep Singh Puri. He has a whole lot of challenges to tackle, beginning with Air India. AMEYA JOSHI lists out the challenges the new government faces in civil aviation.

- Ameya Joshi

One of the prime reasons that people were betting big on the survival of Jet Airways was it was an election year and most thought that it was unlikely that a government which has been projecting itself as business-friendly would let the airline collapse. But the airline’s collapse was faster than what many thought and on April 17, 2019, Jet Airways announced suspension of services.

Amidst a thumping majority, as the incumbent government took the reins of power in New Delhi, there is an urgency which needs to be addressed to ensure that what it faced in the first term – a near collapse of an airline in the first six months of taking over and an airline on lifeline in the last six months of its term is not repeated. And to ensure that the growth trajectory is maintained and more importantly a fine blend of affordable fares and profitable airlines.

With a mandate which was as decisive as now, the second term of the NDA government under the leadership of Prime Minister Narendra Modi could make a big impact on the future of aviation in India, at a time when growth has slowed for the first time since mid-2013.

Financial A) Taxation on Aviation Turbine Fuel (ATF)

It is estimated that ATF comprises about 40 percent of the cost for airlines operating domestic services in India and is the single largest expense head for the airlines. This higher number is due to taxation at the state and central levels on ATF.

While efforts were made by airlines to directly import ATF, they were unsuccessful, and airlines have since been relying on the ATF providers in the country to uplift the daily requirement.