Aviation sector needs sound regulation and competition, not freedom from taxes
The aviation ministry has, in a recent consultation paper, proposed scrapping service tax on air tickets and lowering jet fuel taxes to revive bleeding carriers.
Scrapping taxes is not a sensible idea but moderating them when possible is entirely in order. Sparing one sector from service tax could trigger similar demands from other sectors.
More to the point, such exemptions go against the grain of indirect tax reforms and also the proposed goods and services tax ( GST) that seeks to bring all services under the tax net. However, the aviation ministry has argued that an exemption on air tickets would make air travel cheap by 10% and provide relief to customers.
It is not clear, either, that not paying tax on the value they create would particularly help airlines that do pay taxes on inputs. How would they claim credit for the taxes they have paid? The ministry's proposal is shortsighted.
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PM's meet on infrastructure to consider Airline Hub Policy, new airports
With Prime Minister Manmohan Singh keen to boost investment sentiment through infrastructure development, a meeting called by him tomorrow is expected to finalise an Airline Hub Policy and give a push to setting up of 17 new airports, including seven international ones.
The meeting on infrastructure is also expected consider launch of bullet train between Mumbai and Ahmedabad, elevated rail corridor in Mumbai and starting of two new major ports, sources told PTI today.
The sources said the meeting, attended by ministers of infrastructure ministries like power, coal, aviation, shipping and road transport, has been called as part of an exercise to boost investment sentiment in the country.
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Aviation Article of the day:-
Indian Aviation Industry Convergence
· Indian aviation industry has entered its consolidation stage and has moved its focus from metro routes to tier II and tier III cities to tap their growing potential. The various concessions and cost benefits has made regional market an attractive segment for the Indian private carriers that are struggling with cut throat competition and price wars in serving the metro routes. SpiceJet took the lead in entering the regional market with Hyderabad
· In the light of generating more revenues and to support extensive airport upgrade projects, Indian private airports have shifted their investment focus from aeronautical activities (aircraft fueling, ground handling, and aircraft maintenance and repair facilities) to non-aeronautical activities (duty free shops, retailing). Non-aeronautical activities currently constitute 30 percent in the total airport revenues as against the international benchmark of over 70 percent. This investment may result in making Indian airports reach world class standards, however it may end up with exceeding demand over capacity (with airport utilizing more terminal space to add duty-free shops).
· Indian aviation industry operates nearly 200 Airbus aircrafts and has emerged as the seventh biggest operator of Airbus plane worldwide. The increasing orders and growing fleet size has attracted Airbus to set up a Maintenance Repair and Overhaul (MRO) facility in India in collaboration with Air India India to set up an MRO unit in Nagpur India
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