July 5, 2017 TnH Global

AirAsia India says GST to shave off Rs 400 crore from airlines

Low-cost carrier AirAsia India today said the new tax regime will leave the aviation industry poorer by about Rs 400 crore annually if the government does not roll back the levy.

“On an average, an operator will have to pay an additional Rs 10-12 crore per aircraft in additional levies, which include the 5 per cent duty on plane imports. This will put an additional Rs 400-crore tax burden on the airlines that lease out planes,” AirAsia India managing director and chief executive Amar Abrol said.

But he said the airline has decided not to pass on this additional burden to customers as it expects the government to rollback the duty.

“The problem is that credit set-off of 3 per cent is available only on services and not on purchase of machinery or aircraft imports. Overall, it seems to be a negative impact and the details are being worked out,” he said. However, the 1 per cent reduction in taxes on economy ticket to 5 per cent in GST is good for the industry, he said.

“As of now there is 5 per cent levy on aircraft imports. The industry is discussing with the aviation and finance ministries for exempting this. We will also have to pay 3 per cent GST on lease rentals but that is is available for credit set-off,” Abrol said.

The three-year-old airline closed last fiscal with a revenue of Rs 1,000 crore and Abrol said he hopes to cross that number by December this year as the company will be deploying four more planes by then.

“We are getting our 11th plane this week, which will be deployed from August 1. By Diwali, we will have three more. This should help us increase frequencies,” he said, adding the airline hopes to have the magical 20 planes by 2018 Diwali.

Meanwhile, the airline announced adding Bhubaneshwar to its list of destinations and also adding six new routes connecting New Delhi, Jaipur and Bagdogra to Kolkata.

The airline, which began operations in June 2014, had reported a net loss of Rs 7.8 crore in the March 2017 quarter, down from Rs 26 crore in the December and Rs 65 crore in the September quarter.

News Source: PTI