In its bid to rescue the aviation sector, India is planning to allocate a bail-out package worth of Rs 11,900 crore for the aviation sector, which has witnessed a major hit after the coronavirus halted the air travel and forced countries to close their borders, news agency Reuters quoted two government sources as saying.
According to the Reuters report, the finance ministry is considering to propose a temporary suspension of several taxes levied on the aviation sector, including the aviation fuel tax.
“Taxes could be deferred till the coronavirus spread is contained and the aviation sector can come back to its feet,” one of the sources said as quoted by news agency Reuters, adding that the companies could be permitted to pay the taxes interest-free in the next tax cycle.
The coronavirus has infected over 200,000 people and caused nearly 8,500 deaths in 164 nations, triggering emergency lockdowns and injections of cash unseen since World War Two. In India a total of 168 people have been infected with the virus, with three deaths reported so far.
Governments around the world are worried about the aviation sector which have seen an unprecedented halting due to the coronavirus outbreak forcing the airlines to park their planes and cut jobs as the virus puts break on travel.
Airlines may need a bailout of more than $200 billion, the International Air Transport Association (IATA) estimates, as reported by Reuters. Earlier on Wednesday, the Trump administration sought an approval from the Congress for $50 billion in secured loans to help the airlines during the crisis.
Vistara, a joint venture of Singapore Airlines and India’s Tata Group, and budget carrier GoAir have suspended their international operations. IndiGo, country’s biggest carrier, has cancelled several overseas flights and may be forced to park some planes as domestic air travel also falls.
Global aviation consultancy CAPA’s India unit said that regardless of any fiscal concessions and support the government may offer, most airlines will have to shrink their operations and the more vulnerable carriers may shutdown. CAPA estimates that Indian airlines, excluding state carrier Air India, will report losses of up to $600 million for the January-March quarter, which could worsen if demand continues to fall.
“In the absence of serious and meaningful government intervention, such an outcome could lead to several Indian airlines shutting down operations by May or June due to a lack of cash,” CAPA said in its March 18 report.
(With Reuters Inputs)