Airlines bet on fuel relief, Tier II airports

The civil aviation sector is awaiting relief from the Union Budget to help slash its losses after a bruising year in which its plans went awry. In 2008-09, the industry is believed to have lost more than Rs 10,000 crore on a drop in passenger traffic, low yields from cut-rate fares and high jet fuel prices.

Expectations are that Finance Minister Pranab Mukherjee would rationalise taxes on aviation turbine fuel (ATF) and make budgetary allocations for development of airports in non-metro locations.

The industry has been lobbying hard for a uniform tax on ATF and to bring it under the declared goods category so that it attracts a uniform tax of 4 per cent, whereas the current regime has varying taxes between stages, ranging from 4 to 36 per cent.

The government and previous budgets had ignored the industry's plea. But the industry hopes that aviation will no longer be considered elitist, now that budget airlines have made flying affordable for many. National carrier Air India is also in a mess, which could also aid a sympathetic view.

Ankur Bhatia, executive director at travel firm Bird Group, said the budget should focus on building small town airports. "No doubt the Airport Authority of India (AAI) is investing in modernisation of non-metro airports, but there is a need for further fund allocation and the budget should allocate more funds for up-gradation and development of regional airports," Bhatia said.