As the Indian civil aviation industry struggles to get back on its feet after Covid lockdowns and travel restrictions, high taxes and low fares are proving to be major obstacles to any recovery.
IndiGo airline chief Ronojoy Dutta said he is working with other industry players and the civil aviation ministry to address the problem of high indirect tax rates. In his Christmas and New Year message to employees, Dutta said: “We pay over 21% of our revenues as indirect taxes to the government. We think it is unconscionable that a critical infrastructure industry such as aviation, with its large multiplier effects in employment, should be taxed at such a high rate.
“We are working with other players in the industry and the civil aviation ministry to address this long-standing problem.”
Dutta added that airline ticket prices were among the lowest in the world, hampering a recovery. He pointed out that airlines had incurred huge losses and were forced to borrow heavily and emphasized that “repairing our balance sheet is an urgent task.”
Dutta, however, was hopeful on the civil aviation industry’s long-term prospects, and of IndiGo. He said the airline’s growth would remain muted for the next 24 months, but after that, it will accelerate to 25% per annum.
IndiGo’s parent InterGlobe Aviation reported a net loss of 14.35 billion rupees (US$189.3 million) for the July-September quarter, compared with a loss of 11.94 billion rupees in the corresponding quarter last year. Dutta then claimed that revenue was fast returning to normalcy, but expressed concern over rising fuel prices.
While the Indian civil aviation sector is slowly on the recovery path, the emergence of the Omicron variant of Covid-19 has triggered fresh health concerns and many countries have reimposed curbs to contain the infections. India now has about 150 cases and has put on hold plans to resume scheduled international flights.
Last year the Narendra Modi government imposed a ban on international flights as part of its countrywide lockdown in March 2020 to contain the spread of coronavirus. India now operates international flights through bilateral agreements with various countries, also known as air bubbles.
Civil Aviation Minister Jyotiraditya Scindia said the resumption of international travel depends on the spread of Omicron and his ministry is working closely with the health ministry.
Earlier, the Directorate General of Civil Aviation had decided to restart commercial international flights from December 15, but that was put off after Omicron cases were reported in various parts of the country.