Domestic carriers shell out 30% more on oil due to taxes, says SpiceJet CMD
PTI September 5, 2018
SpiceJet CMD Ajay Singh made a strong pitch to the government on Tuesday to give domestic carriers a "level-playing field" with international carriers who enjoy tax benefits and consequently become able to cushion the impact of high jet fuel prices.
He said domestic carriers needed to raise fares, which was "incredibly" important to remain financially healthy and sustain the growth trajectory in the Indian aviation market.
"What's happening today is quite scary, oil prices are high for every airline in the world but in India we are compounding the problem by also taxing the oil... Our oil is actually costing the airlines in India for domestic travel 30 per cent more than those costing the airline around the world," Singh said at a plenary session of the International Aviation Summit here.
In contrast, airlines around the world do not have to pay taxes on oil and therefore are emerging stronger and this is a problem for the Indian carriers.
"If India truly aspires to be a global aviation power, we need to get a level-playing field. Give us the same cost structure, same cost base that is enjoyed by airlines across the world and then let us compete with the foreign carriers," he said at the event which was attended by Civil Aviation Minister Suresh Prabhu, his deputy Jayant Sinha and many Aviation Ministry officials.
Singh's comments came against the backdrop of domestic carriers suffering financial reverses in the wake of rising oil prices and depreciating rupee. SpiceJet reported a loss of Rs 38.06 crore in the first quarter of the ongoing fiscal.
The SpiceJet Chairman and Managing Director (CMD) said domestic carriers have to raise air fares to remain financially healthy, as he observed that a five-seven per cent hike in airfares has not adversely affected passenger demand.
"There is scope for airline to actually raise fares and not lose to much by way of demand in this market. I hope better sense will prevail and airlines will do this in the coming times because it's incredibly important that airlines are financially healthy. Because without that, the whole big revolution that we are growing on in India will lose out soon," he said.
CEO of Jet Airways Vinay Dube felt that the current crisis faced by the airlines was a temporary phase and that his airline, along with others, would revive from the financial reverses.
Group CEO of Qatar Airways Akbar Al Baker termed the Indian aviation market as a "sleeping giant" and suggested "redesigning of the India airspace" to bring more efficiency in airline operation, along with investment in infrastructure creation.