Moneycontrol
Last Updated : May 16, 2020 06:01 PM IST | Source: Moneycontrol.com

Government announces three measures for aviation. None cheers up the sector

The measures, industry players say, are 'business as usual policy reforms,' and don't give any immediate relief

 
 
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Finance Minister Nirmala Sitharaman on May 16, announced three measures for the aviation sector, but none of these - executives point out - may ease the stress the industry is current facing.

The measures include opening up the air space, to reduce commute time and save fuel costs.

"Right now 60 percent of air space is freely available as air space is restricted for defence purposes. All these years we have been flying to destinations through longer routes. This has to be rationalised as customers end up paying more," the finance minister said.

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The second measure was to put six more airports for auction on PPP basis. These will bring in downpayment of Rs 2,300 for Airports Authority of India. The Minister added that the development of airports will bring in further Rs 13,000 crore. She didn't provide further details, including on timeline.

Thirdly, the Finance Minister reiterated what she had shared while presenting the Union Budget, that the government wants to make India a hub for maintenance, repair and overhaul (MRO) of aircraft.

The measures are unlikely to bring any cheer to the airlines, who had grounded their fleet in March, after the government announced a nation wide lockdown. Most of them, including IndiGo, GoAir and SpiceJet, have been forced to resort to cost cutting measures, such as cutting salary or sending employees on leave without pay.

All of them had asked government for a financial aid, especially to pay salaries.

"These will not help airlines survive the crisis. What the sector needed to survive was direct cash infusion to pay salaries for the period of Government-ordered grounding," said a senior executive from the industry who didn't want to be named.

"We also needed, government-backed credit lines or loans to get back on our feet and sustain losses while demand recovers. Thirdly, a  waiver of all statutory dues for six months to allow airlines to rebuild their balance sheet. But what has been announced are business as usual policy reforms," the executive added.

On the measure to promote MRO in India, Mark D Martin, Founder & CEO Martin Consulting, said: "To kickstart the MRO business would mean a complete and total exemption of  GST on Aircraft MRO services - something I don't think the Government is in a position recommend."

He added that a  lot of what the Minister mentioned had been said in previous Union Budgets, "so therefore the focus now shifts to implementing recommendations made in the speech on a war footing."
First Published on May 16, 2020 04:59 pm
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