India should review its aircraft tax policy: Bombardier

Tags: Bombardier, News
India should review its high fuel costs and aircraft tax policy to make it viable for small airlines to operate in the country, Canadian aviation company Bombardier said today.

"India has the highest fuel cost and taxes in the world and if not it is among the top two or three" which hits the profitability of smaller airlines, said Torbjorn Karisson, Bombardier's Vice President for Commercial Aircraft Sales in Asia Pacific.

Expressing concern over operations of smaller airlines in India, Karisson said such airlines faced many challenges in the country.

He noted that the current system imposes additional tax on aircraft which has more than 76 seats.

Karisson said the new planes were especially designed with additional seats for fuel efficiency and profitability by aircraft manufacturers, considering the need of smaller and start-up airlines.

India would need to review taxes and allow smaller airlines to operate planes with seat capacity between 29 to 149 passengers, Karisson told PTI at the Singapore Airshow.

People from the cities are going back to their homes during long festival holidays by travelling on airlines rather than spent days in rails, he observed.

Travelling was no longer for the rich as average working class people were making cost effective use of their travel time, he argued.

This would also mean more opportunities for airlines in the second and third tier cities and suppliers of smaller planes, said Karisson.

"What we are seeing in India is that people are valuing time more. This is also a general trend in Asia," he said.

Karisson was optimistic of Bombardier's prospects in India, saying it would aim to capture a significant share of the 600 small aircraft required by the country over the next 20 years, especially catering to the smaller tier 2 and tier 3 cities.

Bombardier has over 40 aircraft and business jets operating in India.

Though he did not give a country breakdown of the Bombardier share in the Indian market, he was quick to point out that the Canadian group had 50 per cent of smaller aircraft and business jet shares globally.

"Indian has been a very good and long-term market for us," he said.

Spicejet was currently Bombardier's largest customer in India with 15 aircraft, each of 86-seat capacity.

"We expect SpiceJet to take the original plus 15 planes delivery as there is a need for that," he said.

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