It's about a level-playing field not bailout: Airlines

Here is a verbatim transcript of their exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: Assuming that the government accepts all the demands of the private airlines, will the industry stop making losses. Will it be out of the woods?

Datta: We know that the declared good status with 40% of the cost being aviation turbine fuel cost, out of the total operating expenses. A reduction in average sales tax by 22% roughly will obviously have a significant impact. I haven't worked out the actual amount, which you can easily do, but it results in an 8-10% saving in costs. So similarly, airport development charges, we estimate that total increases that have taken place is roughly USD 250 million cost to the industry annually. So these are significant amounts in the context of a loss that the industry is incurring today.

Q: Were you part of discussions as well today? Are you also a signatory to this protest and we've heard Vijay Mallya say that in the event of things not getting better at the government's end, it might not just be one-day but might be indefinite. How do you see things panning out both for yourself as well as for the industry from hereon?

Singh: Let me just clarify. You said when introduced the story that the airlines were looking for a bailout. The airlines are not looking for a bailout. Essentially, what the airlines are saying is that let us create an environment for aviation in which the cost of aviation in India is comparable to the cost of aviation anywhere in the world. Today, airlines in India are paying 60-70% higher tariff on aviation turbine fuel (ATF). Sales tax is averaging 26-30% and we are requesting that this sales tax be put in a level of which is sustainable and which is comparative to any other airline in any other part of the world.

Similarly, airport charges landing and parking fees are very high. There is a new ground handling policy, which increases the cost of aviation further. We believe that we should be in terms of cost put at the same level as airlines in other parts of the world.

Q: How bad are things with you at SpiceJet?

Singh: SpiceJet has made money in the last quarter but this is an issue, which is not about SpiceJet alone. It is about the entire industry and we believe that for the entire industry to survive, it is important that the cost, which is within the control of the government, be brought at a level that is sustainable and internationally comparable.

Q: The minister has reacted to the press conference that you'll had by saying that both ATF and sales tax are state subjects, we are trying to convince state governments but nothing is really working out. Are you hopeful of it?

Singh: We are hopeful. We have been hopeful for many years. Unfortunately, we have written to the government individually as airlines and as the FIA and we have been doing it for at least the last two years. Unfortunately, no action has been taken even though the Ministry of Civil Aviation has strongly endorsed to what we have to say. We believe it is time for the government to take some action to ensure that this sector remains viable.

Q: Is there a problem with the way the existing business models of these airlines work and perhaps that is why it is making it unviable? For instance, there is a Paramount that flies lesser routes and smaller aircrafts, which is profitable?

Dutta: Please remember, Paramount has a declared goods status as far as ATF is concerned. It has a significant benefit compared to all the other airlines whether it is a low-cost operator or a full service airline. That they have enjoyed that from the first day they started operations because they fall in the category of airline operators who enjoy the 4% declared goods status on ATF.

Q: Why now, this has been a long-standing demand? Why has it reached such a high climax point and why did this protest not happen when you guys were doing irrational pricing and cost cutting, which is clearly not viable?

Singh: It is not that it has happened now. We have been writing about this for at least two years, if not more. We have been speaking at every single forum, individually as airlines and as the FIA. At some point of time, there has to be a limit to the number of times you can approach the government.

The airline industry as a whole has taken a lot of losses in these last two or three years. As an industry, the feeling is that these losses cannot be sustained any longer.