Lok Sabha Question No. 3659 (UNSTARRED), answered on 2022-03-24
Subject: Challenges before the Aviation Sector
Ministry: CIVIL AVIATION
Asked by: Chandan Singh, Ajay Nishad

GOVERNMENT OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA UNSTARRED QUESTION NO. : 3659 (To be answered on the March 2022) 24th

## CHALLENGES BEFORE THE AVIATION SECTOR

3659.

SHRI CHANDAN SINGH

SHRI AJAY NISHAD

## Will the Minister of CIVIL AVIATION

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be pleased to state:-

- (2) whether the Government has identified major challenges in aviation sector of the country;
2. the action taken by the Government to reduce the operational cost of aviation sector;
3. (b) if S, the details thereof;
4. (d) whether the Government proposes to supply aviation turbine fuel at a lower cost;
5. (f) the action taken to reduce the high service charges and other incidental charges which contribute towards the high cost of aviation fuel?

## ANSWER

Minister of State in the Ministry of CIVIL AVIA TION

(GEN. (DR) V. K SINGH (RETD))

- (a) and () Major challenges faced by the aviation sector in the country are as follows:
- (ii) High taxes on aviation fuel
- () Adverse impact of COVID-19 pandemic:
- (iii) Weak financial status of some airlines
- (v) Highly price-sensitive customers
- (iv) Sub-optimal infrastructure
- (vi) Sub-optimal leasing; MRO and manufacturing
- (viii) aviation hubs in India's vicinity, and Mega
- (vii) Low presence on international routes
- (ix) Shortage of skilled professionals etc
- (c) Gevernment has taken inter-alia the following steps to reduce the operational cost 0f aviation sector:
- (e) if so, the details thereof; and
- Goods and Services Tax (GST) rate has been reduced from 18% to 5% for domestic Maintenance, Repair and Overhaul (MRO) services:
- (iii)   Improvement in air navigation infrastructure is carried out to enable better utilization of airspace and airport capacity. being
- (ii) A conducive aircraft leasing and financing environment has been enabled.
- (iv) To reduce congestion at airports and to address the challenge of subinfrastructure, Airports Authority of India (AAI) has taken up development of new and existing airports with a of around Rs: 25,000 crores in next five years: includes construction of new terminals, expansion and modification of existing terminals,expansion andl or strengthening of existing runways, aprons, Airport Navigation Services (ANS) infrastructure, control towers and technical blocks etc: (v) The Public Private Partnership (PPP) airports at Delhi, Hyderabad and Bengaluru are undertaking major expansion projects of around Rs. 30,000, crores by 2025. Additionally, Rs. 36,000 crores have been planned for investment in the development of new Greenfield airports across the country under PPP mode: optimal
- (vi) Government of India (Gol) has accorded 'in-principle' approval for setting up of 21 Greenfield Airports across the country. So far, eight Greenfield airports namely, Sindhudurg and Shirdi in Maharashtra, Durgapur in West Bengal; Pakyong in Sikkim, Kannur in Kerala, Orvakal in Andhra Pradesh, Kalaburagi in Karnataka and Kushinagar in Uttar Pradesh have been operationalized.
- (d) to (f) The prices of Aviation Turbine Fuel (ATF) are market determined, based on global crude oil prices, foreign exchange rate, operational expenses, other incidentals and the profit margin: ATF attracts a 11% Central Excise duty: ATF used by airlines operating under the Regional Connectivity Scheme (RCS) attracts concessional 2% Central Excise duty. Foreign bound aircraft under RCS are exempted from Central Excise duty.

The Value Added Tax (VAT) levied on sale of ATF to airlines varies across States/ Union Territories (UT). The issue of reduction of VAT on ATF has States/UTs have reduced VAT on ATF:

Andaman & Nicobar Islands, Dadar & Nagar Haveli and Daman Diu, Gujarat; Haryana, Himachal Pradesh, Jammu & Kashmir, Ladakh, Karnataka, Madhya Pradesh, Tripura, Uttar Pradesh and Uttarakhand.