Hyderabad: Even as the civil aviation ministry is rejoicing over the turnaround of the national carrier, industry body Ficci feels the government should sell Air India and use the Rs 30,000 crore that was earmarked for the Maharaja to subsidise air travel of Aam Aadmis (and also aurats) by lowering jet fuel price. “The Rs 30,000-crore bailout package for Air India is heavily criticised. This money can instead be used to reduce VAT on ATF and reimburse the states for their losses for 3-5 years,” a report jointly prepared by Ficci and KPMG, said, adding that air travel cannot be the exclusive preserve of the rich and the affluent.
“The airline business requires split second operational, commercial and financial decisions which is not possible in the government environment. The industry also requires significant empowerment of junior officers which again is difficult in the government environment where employees are often worried about a backlash in case a bonafide decision taken with good intent goes wrong. Air India needs to be privatised for its own benefit,” it said.
The report, which was released by civil aviation minister Ashok Gajapathi Raju, however, criticises the comments made by his own government on subsidies to ATF in the 2016 Economic Survey. “Aviation fuel is taxed at about an average 20 per cent, while diesel and petrol are taxed at about 55 per cent and 61 per cent. The real consumers of ATF are those who travel by air, who essentially are the well-off. Hence there is an implicit subsidy for air passengers amounting to about 30 percentage points,” the Economic Survey said.
The industry body, however, feels the Economic Survey’s comments are misleading and unfair. “A 20 per cent reduction in bus and train fares may not create a revolution, but in aviation it can. If India has to grow, we need to gradually shift people from trains to aircraft. Imagine the loss of productivity if executives spend 18 hours to go from Delhi to Mumbai by Rajdhani Express — something they can do in two hours,” the report argued. “ATF in India is costlier than global average... At times an all-expense paid trip to Thailand or Malaysia turns out cheaper than flying within India. India’s skewed pricing policy on ATF has done more damage to Indian trade and tourism than good.”
Gopinath to re-enter airline biz:
With the government planning to boost regional connectivity, Captain Gopinath, the founder of India’s first no-frills airline Air Deccan, may re-enter the general aviation space nearly nine years after he sold out his venture to Vijay Mallya’s Kingfisher Airlines.
“Capt. Gopi’s mission is to start another low-cost airline one... With this new policy, there is a scope for doing it,” said a source on the condition of anonymity. However, the nitty-gritties have not been finalised. Under the new policy, expected to be out soon, airlines will get viability gap fund for bringing air travel cost to less than Rs 2,500 per person.
