Even as Indian airlines went in for a fourth discount war this year, they have been simultaneously pressing the Government for relief in several areas to bring down their expenditure.
Thanks to the fare discounts, SpiceJet and GoAir increased their market share although IndiGo retained the top position in terms of passengers flown. In terms of load factor, GoAir, SpiceJet and Air India were almost on par as was new entrant AirAsia with about 80 per cent of occupied seats.
Analysts say offering of deep discounts is a ploy to corner market share and the figures show the airlines have been successful in luring travellers even in financially distressed times.
But balance-sheets show while SpiceJet and IndiGo lead the discount wars and load factors, they also carry huge debts. As the Civil Aviation Ministry’s answers to questions in Parliament have revealed, most civil airlines have defaulted on a wide variety of taxes. Alarmed by the chronic defaults, the Director General of Civil Aviation has already started examining the books closely, beginning with SpiceJet.
An airline official maintained that discounts are carefully thought out marketing strategies in order to counter the impression that airlines are not being thrifty at a time when money is tight. But these observations do not mask the desire of the private airlines for a bailout package especially because tough times will continue during this fiscal.
Talk of a level playing ground for private airlines is in the air in view of the bail out package for Air India, their public sector competitor, which is reportedly seeking Rs. 8,000 crores for the current fiscal and another Rs. 2,500 crores as previous year’s shortfall.
In meetings with Civil Aviation Ministry officials, airline heads have mentioned the need for cheaper bank loans. But one area where the Government can make an immediate difference is by persuading states to reduce taxes on aviation turbine fuel (ATF).
Some states have resisted as they have few options to make up for the loss of revenue but Civil Aviation Minister Ashok Gajapathi Raju’s home state of Andhra Pradesh has done just that despite the loss of its major airport of Hyderabad to Telangana.
As jet fuel accounts for a little less than half of an airline's operating expenses, sales tax relief will be a big financial help. Mr. Raju is understood to have requested some select states to examine the possibility of following Andhra Pradesh’s example. Airlines are hoping for relief at least from some of the states when Mr. Raju and senior Ministry officials meet state officials later this month.
The Government’s corner also has a number of pending policy initiatives which were discussed during a meeting between Prime Minister Narendra Modi and Mr. Raju about a fortnight back. These include easier norms for flying to overseas destinations, raising the FDI limit and making the country a hub for maintenance, repair and overhaul.
Airline sources are confident that some of the easing up of norms is round the corner, but till then the airlines will have to live with the present state of affairs – periodically offering generous discounts to keep travellers interested while hoping the Government will step in to mitigate their financial woes.
Thanks to the fare discounts, SpiceJet and GoAir increased their market share although IndiGo retained the top position in terms of passengers flown. In terms of load factor, GoAir, SpiceJet and Air India were almost on par as was new entrant AirAsia with about 80 per cent of occupied seats.
Analysts say offering of deep discounts is a ploy to corner market share and the figures show the airlines have been successful in luring travellers even in financially distressed times.
But balance-sheets show while SpiceJet and IndiGo lead the discount wars and load factors, they also carry huge debts. As the Civil Aviation Ministry’s answers to questions in Parliament have revealed, most civil airlines have defaulted on a wide variety of taxes. Alarmed by the chronic defaults, the Director General of Civil Aviation has already started examining the books closely, beginning with SpiceJet.
An airline official maintained that discounts are carefully thought out marketing strategies in order to counter the impression that airlines are not being thrifty at a time when money is tight. But these observations do not mask the desire of the private airlines for a bailout package especially because tough times will continue during this fiscal.
Talk of a level playing ground for private airlines is in the air in view of the bail out package for Air India, their public sector competitor, which is reportedly seeking Rs. 8,000 crores for the current fiscal and another Rs. 2,500 crores as previous year’s shortfall.
In meetings with Civil Aviation Ministry officials, airline heads have mentioned the need for cheaper bank loans. But one area where the Government can make an immediate difference is by persuading states to reduce taxes on aviation turbine fuel (ATF).
Some states have resisted as they have few options to make up for the loss of revenue but Civil Aviation Minister Ashok Gajapathi Raju’s home state of Andhra Pradesh has done just that despite the loss of its major airport of Hyderabad to Telangana.
As jet fuel accounts for a little less than half of an airline's operating expenses, sales tax relief will be a big financial help. Mr. Raju is understood to have requested some select states to examine the possibility of following Andhra Pradesh’s example. Airlines are hoping for relief at least from some of the states when Mr. Raju and senior Ministry officials meet state officials later this month.
The Government’s corner also has a number of pending policy initiatives which were discussed during a meeting between Prime Minister Narendra Modi and Mr. Raju about a fortnight back. These include easier norms for flying to overseas destinations, raising the FDI limit and making the country a hub for maintenance, repair and overhaul.
Airline sources are confident that some of the easing up of norms is round the corner, but till then the airlines will have to live with the present state of affairs – periodically offering generous discounts to keep travellers interested while hoping the Government will step in to mitigate their financial woes.
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