The finance minister Nirmala Sitharaman on Saturday announced reforms to kickstart the civil aviation industry which has been grounded due to the lockdown initiated to control the Covid-19 pandemic.
These included the optimal utilization of country’s aerospace which would result in shortening of routes, lower fuel costs apart from lower duration for flights.
The government also said that it will put up six airports for bidding under public-private partnership (PPP) model.
Private players will make additional investments to the tune of Rs 13,000 crore in 12 airports that were awarded to them earlier, while state-owned Airports Authority of India will receive Rs 2,300 crore down payment from the airport privatisation process.
Meanwhile, the government also said that it hopes that India becomes a hub for maintenance, repair and overhaul (MRO) units after the GST rate associated with it was reduced from 18% to 5% by GST council in March.
However, the government’s proposals disappointed the aviation industry in the absence of any relief measures for cash-strapped airlines that have been grounded for over a month and a half due to the lockdown. “Now we can almost certainly say two or three airlines may not survive the current crisis,” said a senior airline official.
“What has been announced is simply a case of rearranging the deck chairs on the Titanic, along with perhaps shortening the queueing time for the buffet, while the gaping hole from the iceberg continues to take in water,” the official said. Another airline official, also speaking on condition of anonymity, said the airlines needed direct cash infusion. “What the sector actually got from finance minister today are some old announcements repackaged as fresh reforms,” the official said. The Indian aviation industry will require funding of up to Rs 35,000 crore till 2022-2023 as profitability may take a hit due to sharp fall in revenues and higher fixed costs, said credit rating agency, ICRA earlier this week.
Indian carriers are estimated to report a 44% decline in revenue in 2020-21.
