New Delhi: The airline industry expects the government to announce measures that imp-rove the operating climate for airline companies in India through measures that reduce cost of operations for the airline, Vistara CEO Vinod Kannan said Monday.
“Every year there are expectations from the Budget… But the government has a lot of other important issues to deal with in the Budget… From our perspective, to be fair to the government and civil aviation ministry, relief has come in the form of reduced VAT on aviation fuel has helped bring down our costs. Plus, the way aviation fuel prices are calculated has also changed…So, I have to give credit to the government,” Kannan said.
He added that the rest will be left to the authorities. “Over and above that, whether it is the goods and services tax (GST) or trying to give us more benefits or more operating climate favourable, we will leave it to the authorities… Till then, we will live with whatever we have,” he added.
The respite in VAT of Aviation Turbine Fuel (ATF) came after aviation minister Jyotiraditya Scindia started negotiating with state governments listing them the benefits of low tax on fuel. Key states, barring Delhi, Bihar, Assam, Tamil Nadu and West Bengal, have reduced tax on ATF after Scindia’s intervention.
As part of Budget demands, the airport sector has put in a request to allow them to sell domestic Indian liquor at departures tax-free, which will lead to consumers being able to buy Indian brands like Indri and Amrut at Indian airports.
The airport sector has also sought categorization of airports under priority sector, which will bring down the cost of construction for such large infrastructure projects.
Currently, loans provided by institutions for airport construction are classified under the general category, which leads to shorter repayment tenure of 10-14 years with a high interest rate. Inclusion in priority sector would change that to a longer repayment period of up to 20 years and lower interest rates as well.
Kannan also said all legal approvals for its proposed merger with Air India are expected to be in place in the first half of 2024.
In November 2022, Tata Group announced merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1% stake in Air India.
Kannan said the legal approvals for the merger are expected by the middle of 2024 and the operational merger is anticipated by early or middle of the next year. He also said all competition approvals are expected in the current quarter ending March.
On 1 September, the Competition Commission of India approved the proposed merger. Vistara has 67 planes. The airline is a joint venture between Tatas and Singapore Airlines.
(Agencies contributed to the story)
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Published: 08 Jan 2024, 10:00 PM IST
