Budget 2013: What aviation sector demands today?

·        For the aviation industry which is now facing a severe challenge - a long-standing demand has been to include Aviation Turbine Fuel or ATF in the declared goods category.

·        Reduction in airport-related charges to reduce the burden for the airlines.  

·        Allow imports of items related to airfield crash fire tenders and other fire fighting vehicles, runway marking and pavement testing machine, baggage conveyor (handling) system, and airport ground lighting, which are required for the development of airports at a concessional rate of basic custom duty of 5%.

·        Approve support services of airport to be termed under Infrastructure-80IA Act, which would have a positive impact on airlines.

·        New provision for tax incentives for "Maintenance, Repair & Overhaul (MRO) to bring down Airline's O&M costs and could have enhancing impact their earnings.

·        Easing of RBI limits on aviation funding for airport developers, so that the required funding can be raised from a single source/bank instead of the current practice of raising funds from multiple banks. This would go a long way in ensuring faster execution of airport development projects.

·        Setting up of a separate SPV for handling aviation finance at lower interest and longer maturities and also airport operators is allowed to raise funds through Tax-free infrastructure.

·        Introducing many ancillary or support services required which are essential for smooth functioning of airports. These services include fuel facility, parking, cargo etc.

·        Allowing private airport operators to issue tax-free long-term infrastructure bonds to raise funds from the market.

·        Setting up of a dedicated financing company by the government to facilitate lower interest rates and longer maturity of loans. Also, RBI limits on sectoral funding should be eased enough to remove the current requirement for airport developers to raise required funds / debt from multiple banks making process time consuming and cumbersome.

·        One of the main concerns of any airline is running services in remote sectors. The flights run half empty and currently, even on full capacity, the airlines end up losing money. There should be periodically examination of the route economics and to find ways and means to rationalize the routes so as to make the operations more cost effective.

·        Making route dispersal guidelines (to cover airline services in remote areas) mandatory for the airlines.

·        Develop regional airlines and no-frill airports by providing direct subsidies in a transparent manner. The subsidies may also be extended to those airlines which are willing to provide services in remote routes voluntarily.

Finally Air India on a turnaround plan

According to the economic survey - Air India is likely to come out of its precarious financial position this financial year with a positive cash flow, as its performance has improved considerably.

Strategy to cover losses:-

·        Air India had taken several initiatives to cut costs and enhance revenues like route rationalisation, phasing out and grounding of old fleet, freezing of employment in non-operational areas, leveraging assets of the company to increase MRO (maintenance, repair and overhaul) revenue and revenue from the company's real estate properties.

·        As part of its Turnaround Plan, the airline had also initiated measures to operationalise subsidiary companies in ground handling and MRO and transferring manpower and equipment to them to make them independent profit centres.

·        Apart from leasing its headquarters building in Mumbai, cash-strapped Air India has identified some more properties to monetize those in order to raise Rs 5,000 crore as part of its turn around and financial restructuring plan.

·        Air India has identified land at Chennai, Coimbatore and Kolkata, residential plot at DLF Phase-III Gurgaon, a residential apartment in Kolkata and four unoccupied flats in Mumbai.

·        The airline has leased four floors of its headquarters building at Nariman Point on an annual rent of Rs 14.4 crore. Air India is required to monetize its assets in India and abroad to raise Rs 5,000 crore over a period of 10 years, as per the TAP and FRP.Singh also told the House that the national carrier has managed to earn an additional passenger revenue of Rs 680.13 crores and reduced its cash losses by Rs 1,125.50 crores as compared to the corresponding period (between April and December) of the last fiscal.