KPMG for Rs1,000-cr fund to develop smaller airports in Budget
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KPMG for Rs1,000-cr fund to develop smaller airports in Budget

Last Updated: Sunday, February 03, 2013, 13:52
 
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Mumbai: Global consultancy firm KPMG expects some growth-boosting steps, including setting up of a special fund to make smaller airports viable, in Budget 2013-14.

"Setting up of an essential air services fund (EASF) with a corpus of Rs 1,000 crore for providing funding support to small (tier 3/4) airports and airlines operating there can be a big boost to the aviation sector," KPMG Partner and head of aviation vertical Amber Dubey told PTI here.

The country currently has 454 operational and non- operational airports/airstrips, of which state-run Airports Authority operates 125. However, most of them are not financially viable, including some being operated by private companies.

Of the total airports, 14 are international airports, 80 domestic, 12 Customs airports and 19 other civil enclaves.

However, the bulk of the air traffic is catered to by 10 major airports--Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Bengaluru, Kochi, Trivananthapuram, Pune and Ahmedabad.

Dubey said maintenance, repair and overhaul (MRO) ventures be given a 10-year tax-free status as an import substitution measure in the budget.

"It's a high time that government notifies jet fuel, which is the single largest operational cost for airlines to the tune of nearly 50 percent, in the 'declared good' category with uniform 4 percent sales tax across the country", he said.
In addition, the government should also take a call on enhancing the external commercial borrowing (ECB) limit for working capital to USD 1 billion for each airline for an easier access to capital by domestic carriers, Dubey said.

The government had last April allowed domestic carriers to raise up to USD 300 million each from the overseas markets in this current fiscal to meet working capital needs.

The airlines were also allowed to directly import aviation fuel but no airlines yet tapped that route.

KPMG also wants the government to allocate Rs 500 crore in the budget to develop aviation education infrastructure.

PTI

First Published: Sunday, February 03, 2013, 13:52

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