Indian aviation to take off: ‘Rs 98,000 crore investment in airports till 2026; Jet fuel may eventually be under GST’

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NEW DELHI: India will witness an investment of Rs 98,000 crore by private airport operators and the state-run Airports Authority of India (AAI) over the next four years that will take the number of operational airports from 141 current to over 200 by 2025-26.
Two new airlines, Akasa and Jet-II, should start flying maximum by next March.
And to make India’s perennially loss-making airlines — that have been deal another deadly blow by the pandemic, — efforts are on to bring aviation turbine fuel (ATF) under GST eventually. Till that happens, 12 remaining states are being persuaded to lower their VAT rates on jet fuel from the prohibitive range of 20-30% to 1-4% like 13 states and UTs have done in recent months.
Speaking at the India Economic Conclave on Thursday, Union aviation minister Jyotiraditya Scindia laid out the flight path of Indian aviation. While candidly admitting that the sharp hike in ATF prices has been causing stress to Indian airlines (which have lost $2.9 billion during the pandemic), he said several policy decisions have been taken to revive the sector.
“We have seen a very healthy bounce back in recent days in number of domestic air travellers. Regular international air flights were allowed to resume from March-end,” he said.
Elaborating on ATF, Scindia said: “There has been a phenomenal rise in jet fuel prices. They are up by 60-70% in past few months. They have risen five-fold in the last two years. We hope that the hike in oil prices (caused by the war in Ukraine) is transient. While in the long run it will be better to have ATF under GST as that gives input tax credit, in the interim I am requesting states to lower VAT on jet fuel.”
Domestic fare caps will remain for now as “there is not a single unified voice” (from airlines about their removal.) “We have to balance interest of passenger from very high spot fares and of airlines from very low (below-cost or predatory) fares. At the right time, a decision will be taken on fare caps.”
After taking over Air India about three months back, the Tatas had selected former Turkish Airlines chairman Ilker Ayci — a close confidante of Turkish president Recep Tayyip Erdogan who is not exactly known as a friend of India — as AI MD and CEO.
Following opposition from certain quarters, Ayci opted out from taking over this role at AI. Scindia said the government had no role in this entire process as the Tatas now decide what is to be done at AI.
The minister said merging erstwhile Air India and Indian Airlines in 2007 under the then Congress-led UPA was a “fatal mistake”.
“Till 2005-06, as separate entities both AI and IA were profitable. They were culturally very different organisations with different purposes. The (2007) merger was destined for disaster.
“Over the next 14 years, the merged airline lost Rs 85,650 crore. Add to its government guarantees of Rs 50,000 crore; equity infusion of Rs 54,000 crore and debt (till hand over to Tatas) of Rs 62,000 crore. It had become a Rs 2.5 lakh crore milestone around the neck. This milestone had to be removed so that these funds could be used for development purposes and education,” Scindia said.
AAI will invest Rs 25,000 crore over next four years, of which Rs 22,000 crore will be for augmenting capacity at 42 existing airports and three greenfield ones.
“The private sector will spend Rs 67,000 crore on augmenting capacity at seven brownfield airports like Delhi, Mumbai, Hyderabad and Bengaluru and on three Greenfield ones — Jewar (Greater Noida), Navi Mumbai and Mopa (Goa),” he said.

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