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Aviation sector should not expect much from Budget 2021, say experts

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Published : Jan 18, 2021, 9:32 PM IST

Experts opine the aviation sector may not get priority in the upcoming budget presentation as COVID-19 vaccination and defence would take precedence over it. Tax relief on Aviation Turbine Fuel (ATF) has been a long pending demand of the sector.

Aviation sector should not expect much from Budget 2021
Aviation sector should not expect much from Budget 2021

New Delhi: The aviation, one of the worst-hit sectors during the Covid-19 induced economic meltdown, will be left disappointed by this year's budget as it may not get any tax relief on aviation turbine fuel (ATF).

"Nothing major is going to be tabled in this budget for the aviation sector as the priorities of the government are different this time. Naturally, they will try to see that coronavirus vaccine is delivered to most of the people It will suck a lot of exchequer's money," said VP Agarwal, former chairman of the Airports Authority of India (AAI).

"In aviation, relief in the form of aid is not possible from the government side and the long-pending demand from the domestic airlines to lower taxes on aviation turbine fuel (ATF) will likely not to be considered by the Centre," Agarwal added.

He added that in this fiscal budget, the government may focus on meeting the requirements of the defence sector owing to conflicts on the borders. "At the same time, farmers' issue is also a challenge in front of the government and so they will like to propose something to the farmers and that's why aviation is bound to be the last priority," he said.

Also Read: Limits on air fares set in seven bands as per flight durations: Puri

"Reducing the tax burden on airlines, the inclusion of ATF under GST, looking for ways to help leasing companies to set up shop in India should be the central focus for the government in the aviation sector," said Ameya Joshi, an aviation expert.

According to rating agency ICRA, the Indian aviation industry would suffer losses worth Rs 21,000 crore in FY2021, against a net loss of Rs 12,700 crore in FY 2020 due to lower revenues and high fixed costs.

The ICRA report released in December, also estimated that the debt level too for the industry will be increasing to about Rs 50,000 crore (excluding lease liabilities) over the next financial year (FY2021-22) and the industry will need additional funding of Rs 35,000-37,000 crore over FY2021 to FY2023.

The country's Civil Aviation sector has experienced lower growth in traffic as compared to the previous years.

The data released by the aviation regulator Directorate General of Civil Aviation on Friday said that the number of passengers fell 43.7 per cent from a year earlier in December.

According to DGCA, passengers carried by domestic airlines declined by 43.72 per cent to 73 27 lakh in December 2020 from 130.18 lakh in December 2019.

New Delhi: The aviation, one of the worst-hit sectors during the Covid-19 induced economic meltdown, will be left disappointed by this year's budget as it may not get any tax relief on aviation turbine fuel (ATF).

"Nothing major is going to be tabled in this budget for the aviation sector as the priorities of the government are different this time. Naturally, they will try to see that coronavirus vaccine is delivered to most of the people It will suck a lot of exchequer's money," said VP Agarwal, former chairman of the Airports Authority of India (AAI).

"In aviation, relief in the form of aid is not possible from the government side and the long-pending demand from the domestic airlines to lower taxes on aviation turbine fuel (ATF) will likely not to be considered by the Centre," Agarwal added.

He added that in this fiscal budget, the government may focus on meeting the requirements of the defence sector owing to conflicts on the borders. "At the same time, farmers' issue is also a challenge in front of the government and so they will like to propose something to the farmers and that's why aviation is bound to be the last priority," he said.

Also Read: Limits on air fares set in seven bands as per flight durations: Puri

"Reducing the tax burden on airlines, the inclusion of ATF under GST, looking for ways to help leasing companies to set up shop in India should be the central focus for the government in the aviation sector," said Ameya Joshi, an aviation expert.

According to rating agency ICRA, the Indian aviation industry would suffer losses worth Rs 21,000 crore in FY2021, against a net loss of Rs 12,700 crore in FY 2020 due to lower revenues and high fixed costs.

The ICRA report released in December, also estimated that the debt level too for the industry will be increasing to about Rs 50,000 crore (excluding lease liabilities) over the next financial year (FY2021-22) and the industry will need additional funding of Rs 35,000-37,000 crore over FY2021 to FY2023.

The country's Civil Aviation sector has experienced lower growth in traffic as compared to the previous years.

The data released by the aviation regulator Directorate General of Civil Aviation on Friday said that the number of passengers fell 43.7 per cent from a year earlier in December.

According to DGCA, passengers carried by domestic airlines declined by 43.72 per cent to 73 27 lakh in December 2020 from 130.18 lakh in December 2019.

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