NEW DELHI: SpiceJet CEO Ajay Singh said on Wednesday that the country’s civil aviation sector was struggling with age-old issues and very little was being done to help airlines become profitable.
“The issues we had when we started SpiceJet in 2005 still exist in 2018. This needs to change. We have this bad habit of shooting ourselves in the foot. We need to take big decisions,” Singh said while speaking at Aviation Conclave 2019.
He added that the sector was struggling to have ATF brought under GST because there was lack of political will, especially from the states.
“Suddenly we find in the GST Act that while they did not include ATF, they included all sort of aircraft components, and now you have all sorts of taxes and charges on importing services and spare parts. So, while our civil aviation policy says that the objective is to reduce cost, we are increasing all sorts of costs,” Singh said. Taxes on jet fuel in India are among the highest in the world, and last year’s sharp spike in prices of fuel continue to hurt the operations of domestic carriers, including SpiceJet. At present, India’s Central government charges 14 per cent excise duty on ATF, and state-level taxes can go as high as 29 per cent.
According to the Centre for Asia Pacific Aviation (CAPA), Indian carriers are poised to lose a total of $550 million to $700 million during 2019-20, less than an estimated loss of $1.7 billion for 2018-19.
Beside the high taxes, Singh said the issue of throughput charges was severely impacting carriers.
“We are paying taxes for zero services. Numerous charges are levied by airports on oil companies for refuelling aircraft, which in turn is passed to us, and adding excise and local sales tax to it, we are paying nearly 60 per cent more than the real price,” Singh said.