‘Eliminate Excise, Bring ATF Under GST’
The Indian aviation sector is in dire need of support if it is to emerge from the adverse effects of the lockdown. Ajay Singh, Chairman & Managing Director, SpiceJet tells Ashish Sinha of BW Businessworld that the government needs to act fast, and act now else Indian carriers may perish for good. Excerpts:
Would you say that two years of hard work on cargo has finally paid off?
There were a lot of doubts and questions on the viability of cargo operations in India when we launched SpiceXpress, our dedicated cargo arm, in September 2018. It was kind of a natural progression for SpiceJet. While our decision may have raised eyebrows then, it was a no-brainer for me. A country as big as ours definitely needed a big cargo operator. There was so much to be done. It has taken SpiceJet a lot of time and energy and of course a lot of investment to make SpiceXpress what it is today. It’s only recently that the national focus has shifted to cargo flights but we have been doing well for some time now.
Where does your cargo operation stand today?
SpiceJet is India’s biggest air cargo operator and the only domestic airline which has a dedicated fleet of freighters. During the lockdown between March 25 and May 6 we have operated around 825 cargo flights carrying 6,000 tonne of cargo — this is more than double of all domestic airlines combined together.
You have also expanded your international network rapidly during this time?
Yes. We are operating regular cargo flights to more than 20 international destinations. During the lockdown period, till May 6, we have operated some 300 international cargo flights.
Are you also using passenger planes for cargo operations now?
Yes. On April 7, SpiceJet operated India’s first cargo-on-seat flight carrying medical and vital supplies in passenger cabin and belly space. Since then, we have been regularly deploying both our B737 and Q400 passenger aircraft to carry cargo in the passenger cabin.
As passenger demand would take time to grow, do you plan to add more freighters or may be convert your passenger planes into cargo planes?
That’s an option we are seriously considering. You will be surprised with the kind of demand we are witnessing for cargo. There are so many requests daily to accommodate stuff in our planes but there is hardly any scope as the planes are flying almost full. We are operating multiple flights daily to many destinations. For example, today (May7) we operated two flights to Cambodia.
Do you think all the Indian carriers will survive the pandemic? There is already a lot of talk about that…
I am an optimist and as far as the SpiceJet family is concerned, we have seen worse times than this. We came back from a closure in 2014 when nobody gave us any chance at all of being able to come back and fly again. We look at every adversity as an opportunity and that is the DNA of SpiceJet. We will find ways to make this adversity work for us and in our favour, and we will be a stronger airline in the years to come.
What can the government do to help the airlines?
Most countries around the world have tried to help airlines by recognising that aviation is a strategic business in terms of salaries. If the government could help pay those who get, let’s say, less than Rs 25,000, or at least a part of that salary, that would be extremely helpful. Exempting airport charges for a period of time would be extremely helpful as well.
Indian aviation fuel is taxed at the highest possible slab. There’s no country in the world of equivalent size or equivalent aviation market that taxes fuel like this. We need to make sure that ATF does not continue to be taxed at the highest level in the world. We need either reduction in taxation or ATF to be included under the ambit of GST.
On average, our fuel taxes range between 35 per cent and 40 per cent, if you count both excise duty and sales tax. Eliminating excise duty at this time would be helpful. It’s not a very large ticket item for the central government. Also, there are some states which have very high sales tax.
Will bringing ATF under GST help?
Yes, it will. Under the present circumstances if we can get air turbine fuel included in the GST regime – it is a long-waited structural reform -- the state and Centre put together will not collectively lose money, but it will help clean up the system tremendously.
Are there any charges that can be re-looked?
Look at some of the infra charges that airlines need to pay; they are excessive in very many ways. For example, the infra charges for storing fuel at an airport…the tank in which you store the fuel, the total cost of tank is not much…maybe Rs 30-40 crore but what is being charged to airlines at certain airports is more than 10 times that amount every year. So those are the anomalies, I think, that the government needs to look into.
