Airlines could suffer Rs 15,000 cr loss this fiscal: Assocham

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Pitching for opening of the domestic airlines for foreign investment, industry body Assocham on Sunday warned that the airlines could suffer a loss of Rs 15,000 crore this fiscal with Air India accounting for half of it.

With the Kingfisher Airlines landing into a severe financial problem, the chamber said taxes must be reduced on the jet fuel to make the airlines viable so that the industry can grow commensurate with the expansion of the traffic.

"Airlines could suffer losses worth about Rs 15,000 crore in the current financial year with Air India alone likely to account for more than half of it," Assocham secretary general DS Rawat said.

Latest estimates show that Air India had a net cumulative loss of Rs 20,320 crore between April 2007 and March 2011.

Assocham said the aviation industry has all ingredients to grow, but airlines are facing huge losses as over one-third of operating costs are on account of aviation turbine fuel (AFT) which is heavily taxed.

He said foreign airlines are not allowed to invest directly or indirectly in domestic carriers, 'a rule the government should scrap for healthy growth of civil aviation sector'.

Further, airport charges must come down and ground handling operations need to be streamlined.

India's scheduled airlines have 430 planes now, it said adding that the figure is likely to go up to 1,500 by 2025.

"India's unique geographical position offers an opportunity to become a global hub for international airlines as well," Rawat said.

The increase in traffic and aircraft fleet will require significant investments in terms of expanding and upgrading existing infrastructure facilities besides creating new ones.

"For that, a right policy mix, an encouraging tax structure and a healthy regulatory mechanism are essential," he said.