Indian government is planning to set aside $1.6 billion to mitigate the loss faced by aviation sector amid the coronavirus pandemic, which has been marred gravely after countries across the world are forced to close borders. The Finance Ministry is considering a proposal that includes the temporary suspension of most taxes levied on the sector, including a deferment of aviation fuel tax, said the sources, who have direct knowledge of the matter.

“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, adding that the companies could be permitted to pay the taxes interest-free in the next tax cycle.

Governments all over the world are up in arm to pull airlines out of the current spell of stagnation that have forced them to park planes and cut jobs. Airlines may need a bailout of more than $200 billion, the International Air Transport Association (IATA) estimates.

Vistara, a joint venture of Singapore Airlines and India’s Tata Group, and budget carrier GoAir have suspended their international operations. IndiGo, India’s biggest carrier, has cancelled several overseas flights and may be forced to park some planes as domestic air travel also falter.

India unit of Centre for Asia Pacific Aviation (CAPA) said that regardless of any fiscal concessions and support the government may offer, most airlines will have to shrink their operations, while the more vulnerable carriers may shutdown. According to CAPA estimates, India’s airlines, excluding state carrier Air India, may report losses of up to $600 million for the January-March quarter, which could worsen if demand continues to fall.


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