Ajay Singh, Chairman of Spicejet and the man who came up with the slogan ‘Abki Bar Modi Sarkar’, today blasted the government’s approach towards the aviation sector.
Speaking at the 12th International Conference-cum-Awards on Civil Aviation & Cargo by FICCI, Singh was unsparing in his criticism of government’s taxation policy towards his industry.
“There is no country in the world which taxes aviation fuel like we do, we pay 35 per cent tax on average on aviation fuel, this definitely needs to be addressed urgently,” Singh said, amid one of the worst slowdowns ever to affect India’s aviation industry.
Private airlines in India are estimated to have lost around Rs 40,000 cr in the year ended March, compared to a profit of Rs 21,589 cr in the previous year and a profit of Rs 17,195 cr in the year before that.
Jet Airways, one of the pioneering private airlines in the country, folded in April after mounting losses eroded its net worth and it could no longer find more banks willing to lend more money.
Singh’s SpiceJet has been one of the biggest beneficiaries of Jet Airway’s tumble: The airline has launched over a 100 new flights since Jet started wobbling in April. Still, said Singh, we must introspect about the reason for the debacle.
“We need to celebrate the fact that despite the failure of Jet Airways, the speed at which India recovered and got capacity back and got fares back to a normal level, is a great testament to the way India and government work together to make that happen…At the same time, I think, this is a time for sombre reflection, the failure of Jet Airways and the condition of Air India, I think must give us pause,” he said.
TAXES AND DEATH
Singh, who is known to be close to the current, BJP-led administration at the center, did not let his relationships come in the way of highlighting government’s role in contributing to the sorry state of the industry today.
In particular, he said, India’s taxation system needs a massive overhaul if we are to remain competitive in a global market place.
Indian authorities have spoken about converting India into a hub for aircraft maintenance and so on. This year’s budget, for example, talked about trying to attract foreign investment in aircraft maintenance and repair and leasing.
“We indeed must be a true international global hub of the scale of Dubai or Singapore and we need to have a strategy to compete with them and we must work as a country to finalise, formalise a winning strategy which ensures that India is a global hub and a leading aviation country in this world.”
On this subject, Singh pointed out that every year, the industry keeps giving representations and white papers to the government on the need to rationalize the taxes imposed on the sector to little avail. There has been “enough talk”, he said, and little action.
“The inclusion of aviation turbine fuel in GST is a long standing demand, every year we spend countless hours with various ministries of the government talking about this,” he said.
“If the ambition indeed is to be globally competitive, to create international hubs and carriers that are competitive in this world and if indeed the ambition is to be world leader in aviation, we need to resolve this problem quickly, there has been enough talks on this issue.”
In fact, said Singh, in many ways, things are becoming worse, as new taxes continue to be imposed on the sector in spite of its sorry condition.
“We have additional tax on import of spare parts that come back after repair, which is five per cent, which the industry has been paying for last year and a half, about INR 2,000 crore of industry money is struck under protest,” Ajay Singh said.
“We also pay tax on tax in very many ways, in transport of fuel to our planes we pay tax twice over. As if it was not bad enough to pay the highest tax, we are also paying tax twice over.”
To emulate the examples of Dubai and Singapore, he said, we must have a strategy to have a strategy to compete with them.
“We must work as a country to finalise, formalise a winning strategy which ensures that India is a global hub and a leading aviation country in this world,” he urged.