‘Coordinated protocols needed to ease air travel between regions’

Forum Gandhi Mumbai | Updated on July 07, 2021

Remi Maillard, President & MD, Airbus India & South Asia

Lack of uniform taxation on ATF a concern, says Airbus India MD

The Covid hit Indian aviation industry needs coordinated travel protocols to ease air travel between regions, according to Remi Maillard, President & MD, Airbus India & South Asia.

“We need coordinated travel protocols to ease air travel between regions. Disparate inter-State Covid-19 protocols are undermining the recovery of domestic air travel whereas evidence increasingly demonstrates that the aircraft travel environment is not a prominent vector for infection and that aviation today is capable of restricting virus translocation. With the vaccination drive gaining momentum, the government must harmonise testing and quarantine rules followed by the States,” Maillard told BusinessLine.

Aviation sector hit

The second wave of Covid-19 has pushed the aviation sector to the brink. Domestic traffic has plunged to below 30 per cent of pre-Covid levels with load factors below 50 per cent and hundreds of aircraft grounded.

As far as international air travel is concerned, the Indian government has bilateral ‘air bubble’ agreements with at least 13 countries. However, several other countries have barred travel to and from India.

Maillard believes that the ‘air bubble’ bilaterals are likely to continue. Earlier this year, guided by IATA, many countries have been rolling out ‘vaccine passports’ and corridors. However, there has been opposition to the same by the Indian regulators.

Maillard said: “The Indian government is requested to clarify its stand so as to facilitate seamless international travel when borders open up and scheduled international commercial flights resume.”

The Airbus India chief said that the sector is faced with an existential crisis and it requires the Government's intervention.

Last month, the Centre extended the benefits of the Emergency Credit Line Guarantee Scheme (ECLGS) 3.0 to the civil aviation sector. He said that while it was a welcome move, “I urge the banks to ensure priority disbursement to the sector companies to help meet their working capital and additional term loan requirements.”

Speaking on the Regional Connectivity Scheme, he said India must include single-engine helicopters, and free-up helicopters airspace.

On the issue of the GST on aviation turbine fuel, he said “There is no uniformity of taxation on ATF. It is time to reach alignment on aviation turbine fuel under the ambit of GST.”

Some States classify it under Sales Tax and some under Value Added Tax. The general rate on ATF charged by the States goes up to about 30 per cent, he explained. “The reality is that ATF accounts for a modest portion of the State’s petroleum revenue but has a major adverse impact on opportunity cost and growth potential.”

He further added that the uniform taxation of ATF under GST will not only increase the competitiveness of Indian airline operators but also ATF supplying companies vis-à-vis imports.

MRO opportunity

Highlighting the opportunity in Maintenance Repair and Operations (MRO), Maillard said though the government has taken major steps towards tax reforms for the sector “ some actions remain to be taken, such as exemption of GST on parts imported for the aviation sector and rationalisation of DGCA fee structure for MRO.”

Currently, about 85 per cent of repair work is done outside the country. India’s main competitors are in UAE, Singapore, Sri Lanka, EU and the US, among others. Indian aviation operator spend close to $1.4 billion on overseas MRO services.

Published on July 07, 2021

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