The cash-starved airline industry is looking forward to the ensuing budget with great expectations as it desperately wants changes in the FDI policy on aviation and more tax sops to help reduce the high debt and cost burden.
The budget may, however, bring some good news for ailing Air India with the government likely to consider a support package of about Rs 10,000 crore, including additional equity infusion of Rs 6,600 crore.
While the government has already taken a major policy initiative to allow the debt-ridden industry to directly import jet fuel, the beleaguered airlines are seeking 'infrastructure status' to the industry to lower the incidence of taxation.
The government has also favoured changing the policy to allow investments by foreign airlines in Indian carriers, but it is yet to be notified.
With Kingfisher Airlines and Air India being the worst- hit, industry sources said the Indian carriers, which were starved for cash and burdened with a combined debt of around Rs 50,000 crore, desperately needed to raise equity to remain afloat.
The government should look at further easing investment norms for the sector in the budget, particularly those relating to allowing foreign carriers pick up stake in Indian airlines, they said.
Aviation consultancy firm Centre for Asia Pacific Aviation (CAPA), which estimates a combined loss of $2.5 billion for the Indian carriers, said the robust growth in air traffic has failed to translate into profits due to the impact of high jet fuel costs and the inability to raise fares in a competitive market.