Every Year with the changing Calendar, we Indians look forward to a more hospitable budget.
This year also the expectations are high.
Aviation, its importance, and the robustness of the system is a well-established parameter is ascertaining a country’s level of development, its GDP, and its financial strength.
Post the pandemic, the Aviation Sector in India has rebounded successfully, keeping abreast of similar actions in developed economies of the US & Europe.
After over 70 years of attaining Independence, now Aviation is no longer considered a necessity but a Public utility service, just like Railways, Highways, electricity, and water.
Despite the Central Govt. doing away with a separate Railway Budget, it has over the last decade increased its focus on transportation and movement and the allocations have been made in the budget giving its due importance.
Aviation, as a sector a whole, is a highly capital-intensive business and even marginal financial impacts have a major impact on the sector as a whole. A history of two key players Kingfisher and Jet Airways shutting shop and the Sale of Air India to a private owner says it all.
Unfortunately, almost everything in aviation is related to international financials, be it the spares cost, the cost of training pilots, the aviation fuel, and even the acquisition of aircraft as all are imported and are dependent on the volatile international market.
One major input, Aviation Turbine Fuel (ATF) is a price-controlled input that accounts for over 50% of the operating cost of an airline.
ATF Prices in Metros (Rupees/Kl) for Domestic Airlines
(Ref. IOCL Website)
Applicable from January 1, 2023
| Metros | Prices |
| Delhi | 108,138.77 |
| Kolkata | 115,008.08 |
| Mumbai | 107,084.11 |
| Chennai | 112,540.95 |
ATF Prices in Metros (Dollars/Kl) for Domestic Airlines on International Run
Applicable from January 1, 2023
| Metros | Prices |
| Delhi | 999.05 |
| Kolkata | 1,036.31 |
| Mumbai | 995.29 |
| Chennai | 993.43 |
| Metros(in INR with 1 USD= 80 INR) | Prices |
| Difference at Delhi | 28,214.77 |
| Difference at Kolkata | 32,103.28 |
| Difference at Mumbai | 27,460.91 |
| Difference at Chennai | 33,066.55 |
The above table clearly shows a loading of approximately Rs. 30,000/- per KL on domestic consumption. More interestingly, the ATF is taxed both by the Center and then the state which accounts for the regional rate difference.
The Government should rationalize the Tax structure and bring it under the ambit of GST so that the airline is able to take the input credit as well so that the Tax loading can be balanced.
Another aspect that the Govt. has to look into is rationalizing the Airport Charges. India had in the past most of the airports operated by the Airport Authority of India and had reasonable usage charges per passenger usually referred to as User Development Fees (UDF) which were around Rs. 100.00 per passenger. Now the private airport operators are running amok and raising the UDF at whims and fancy and Govt. of India should put a hold on that or provide a limit to the increase.
A case in the point is quoted below:
The Ahmedabad International Airport (AIAL) has sought raising user development fees (UDF) from the current Rs 100 per departing domestic and international passenger to Rs 703 and Rs 1,400, respectively from February 1, 2023, to March 31, 2024 (Ref. TOI, Nov. 2, 2022)
The third aspect the Govt should look at is they should consider Aviation & Airlines as an Industry and provide subsidized financial credit facilities. Why is it that 100 % of Aviation Assets (aircraft) are on Lease from foreign registered entities. The SARFAESI Act passed by the Parliament of India in the year 2002 has literally banned any Indian Bank to finance aviation assets? Today India is losing revenue and valuable foreign exchange in terms of Lease rentals to numerous off-shore entities in Ireland, the Cayman Islands, and other Tax Havens because of these anomalies in rules.
