Federation of Indian Airlines (FIA) has pinned its hope on Budget 2008. FIA is looking forward to Budget 2008 so that the Finance Minister takes up certain matters related to the industry, which need to be attended. With the Budget 2008 just a few days away, the airline industry in the public as well as the private sector hope to avail of equal treatment from the Indian government.
Expectations of Indian Airlines Industry from Budget 2008 are that the private airline companies, which are heading for acquisitions as well as mergers ought to be relieved of income tax. The same approach was taken for Indian as well as Air India. The facility of tax relief was given to them to ease the merger of Indian and Air India. Expectations Of Indian Airlines Industry From Budget 2008, as per the pre budget memorandum prepared by the Federation of Indian Airlines also hopes that the budget would take care of the accumulated losses as well keep in mind the depreciation. The Finance Act 2007 had amended Section 72A provisions pertaining to depreciation and accumulated losses. Thereafter, merger of Indian as well as Air India was effected. This was followed by the merger of Air Sahara and Jet Airways. Even Kingfisher Airlines purchased a stock in Air Deccan. The merger of Air Sahara and Jet Airways followed by Kingfisher Airline's purchasing stock was carried out without availing of the provisions of income tax.
The Federation representing the airline industry also states that the capital costs owing to airline business and the circumstances under which the airlines operate are similar in case of private as well as public sector airlines. The Federation of Indian Airlines or FIA identifies and discusses issues related to and on behalf of airline industry. The various matters are taken up with the government departments, regulatory bodies as well as the key shareholders.
Expectations of Indian airlines industry from budget 2008 also include matters related to ATF or Aviation turbine fuel. The FIA has urged the government to furnish a “declared good status” to the ATF, the reason being if this status is acquired, a uniform sales tax of 4% would be levied throughout the country. Other expectations of Indian Airlines industry from budget 2008 also include the request for slashing Customs duty pertaining to ATF by 50% for operations within the country and bringing down the rate to 5%.
The FIA decided to take this step of requesting the government to reduce prices of ATF because IOC, HPCL, BPCL, all of which are public sector oil companies dealing with marketing of the same did not budge even though they had been requested to decrease cost of aviation turbine fuel.
The FIA or Federation of Indian Airlines feels that if these measures are taken the distinction, which exists in the cost of aviation turbine fuel for domestically operated airlines as well as the internationally operating airlines would be removed. Usually the price rate of aviation turbine fuel for domestic flights are 70% to 90% more as compared to the international ones.
A small instance would make the disparities clear.
In the month of October, the cost of ATF or aviation turbine fuel was Rs 23,064.31 for every kiloliter. In Dubai, the price of ATF was Rs. 24,806.23 for every kiloliter. In contrast to this, the cost of ATF in Chennai was Rs. 43,298.75 while in Delhi the cost of aviation turbine fuel was Rs.39.767.84.
There should be a thorough review of service tax, which is imposed on the business class as well as first class international flights and the tax imposed on landing. The FIA also hopes for reviewing the fees incurred as airport fees and navigation charges.
Expectations of Indian Airline industry from budget 2008 are many and one of them being the recruitment of more number of pilots in the country as there is a scarcity of pilots in the airline industry. This has also been a cause of concern for the Federation of Indian Airlines.
Expectations of Indian Airline industry from budget 2008 comprises certain disputes with regard to fringe benefits, which need to be sorted out. The FIA states that expenses incurred under the following circumstances cannot be regarded as fringe benefits.
In flight entertainment
Crew related expenses
In case flights are held up or canceled, the passengers are given accommodation in hotels. The airline officers along with their families also avail of these benefits. The expenses incurred on these do not fall in the category of fringe benefits.