Budget 2017: Mixed reaction by aviation, tourism industry experts

New Delhi: Aviation and tourism industry experts today gave a mixed reaction on the Union Budget.

Terming the budget as "overall, a well-balanced, pro-poor, pro-growth budget" Amber Dubey, Partner and Head (Aerospace and Defence) of KPMG in India said the announcement of select AAI airports in Tier 2 cities to be taken up for operation and maintenance in PPP mode is a development step.

"It will bring in greater efficiency, best practices and accountability. Higher commercial revenues will help reduce aeronautical charges and make flying more affordable," he said.

Finance Minister Arun Jaitley in his budget speech said that the AAI Act will be amended to enable effective monetisation of land assets.

"Many AAI airports especially at state capitals have significant commercial value. The revenue generated can be utilised for airport upgrade, development of new regional airports and for reducing aeronautical charges," Dubey said.

"Under Regional Connectivity Scheme (RCS) viability gap funding (VGF) will be exempt from service tax for a period of one year from the date of commencement of operations of RCS airport. This should be extended to the entire duration of the VGF since by definition, the VGF is the subsidy paid by the government to make regional connectivity viable. A subsidy cannot be treated as taxable revenue," he added.

Abolition of FIPB is a welcome step, he said adding there are enough checks and balances at Civil Aviation Ministry and DGCA to keep any undesired foreign investors out.

"Awarding of operations and management of airports in tier II cities on PPP mode is a welcome move as it will help create a roadmap for private sector participation in airports in the country and help in improving the operations at these airports," Peeyush Naidu, Partner, Deloitte Touche Tohmatsu India said in his reaction.

Albert Tjoeng, Assistant Director, Corporate Communications, Asia Pacific at International Air Transport Association (IATA) said, "The Finance bill 2017 has added new provisions for the future introduction of submission of PNR data by airlines to the Indian Customs. IATA hopes that the established global standards for transmission of PNRGOV data would be adhered to.

"We would also urge that stakeholder consultations precede the development of any regulations detailing the form and data elements for this information."

Kapil Goswamy, CEO and Managing Director BigBreaks.Com, however, said the budget has once again disappointed the travel industry.

"Despite being a key sector of the economy that brings multiplier benefits, the travel and tourism sector stands largely ignored. Our concerns about high tax rates are valid concerns and we are dejected that the government paid no heed to them," he said.

Across the world, governments provide huge incentives and tax breaks to the travel industry to encourage inflow of tourists. However, in India travel industry continues to be a highly taxed sector which makes us uncompetitive as compared to other destinations, he said.

"The only notable announcements have been the creation of five special tourism zones and the revival of the Incredible India campaign. Both are positive moves but they will have only long term impacts," he added.

Terming the budget as one which has "very little" to offer to the tourism industry, Mahesh Iyer, COO, Thomas Cook (India) Limited said with plans to launch Incredible India 2.0 as the next phase of growth for domestic tourism with respect to India, there is something to look forward to.

"This year's budget is a progressive one and lays out a wider government policy towards achieving greater macroeconomic stability and better fiscal management. The sharp focus on building improved connectivity, particularly investment in road, railways & airport infrastructure across the length and breadth of the country, is a welcome move for the travel & tourism sector," Sharat Dhall, COO(B2C), Yatra.Com said.

This will put a much larger number of destinations on the tourist map by reducing the travel time to these smaller cities and towns, he added.