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Reduce tax on ATF or include it under GST: Ajay Singh, SpiceJet

We need to take steps that help us accelerate growth over the next few years, said Singh.

ET Now|
May 24, 2019, 04.14 PM IST
Ajay Singh-SpiceJet-1200
If we can address some of the structural issues bugging aviation sector, there are many years of good growth ahead of us, said Ajay Singh, Co-Founder, SpiceJet, in an interview with ETNOW.

Edited excerpts:

The exit polls were correct but does the extent of the NDA victory come as a surprise to you?
Absolutely! It is a huge victory for India and its people . to have a strong and stable government for the next five years is a great boon and will really help in building a strong economy. It is a wonderful news for everybody.

In all likelihood, there is going to be a reshuffle in key cabinet posts this time. What is your expectation?
It is not really for me to comment about. It is really for the Prime Minister to decide but whoever he chooses, the objective of the government will be to accelerate the economic growth.

What sort of indications and action should we expect in the first 100 days of this new government?
The focus will be on making it a more enabling environment and improving the investment climate so that there can be more investment in this economy and I think a plan will be made to speed up economic growth in the country.

The first half of 2019 has been soft. Do you think this year is going to be a dull one and that perhaps hope will be only beyond this year for the aviation sector?
We should not really be looking short term. We need to take steps that help us accelerate growth over the next few years. Just to look at the next two quarters is not wise because some of this will obviously depend upon what happens to oil and what happens to other geopolitical factors. But in the long run, we need to be aiming for a $5-trillion economy as the NDA manifesto has said.

And to make that a reality, we need to be growing at 10% a year for the next 10 years. For that to happen, let us take steps to make sure that we have created enough infrastructure for that large economy as well as created a much more enabling environment to make that a reality.

What will be the key priorities for the government now?
The top priority is job creation and that will happen when the economy grows. For this, we will need both private sector as well as public sector investment. We need to get the private sector to start investing again. We need to get the banks to start lending and we need to create a better environment for businesses to thrive.

There are certain tailwinds like the US-China trade war, There are opportunities for India which can be used to our advantage. There are certain tailwinds but most importantly, we need to create conducive environment for businesses to thrive.

What does the government need to do in terms of meaningful reforms or changes in the aviation policy framework?
Those issues are pretty well known; we are increasingly competing with the best airlines in the world and we need a level playing field with them. We need to make sure that the aviation turbine fuel does not continue to be taxed at the highest level in the world.

We need either the taxation to be reduced or aviation turbine fuel to be included under the ambit of GST. There has been significant dialogue on this with the current government and we are confident that this will be taken forward by the new government.

In addition to that, there are certain other spaces such as creation of infrastructure to enable aviation growth and also double taxation on certain issues. The import duty which has been imposed on parts which are being repaired overseas also need to be addressed quickly. But having said that, we have an unprecedented opportunity in aviation. There is an unprecedented opportunity to connect India to itself, India to the world and be an aviation super power.

I hope that the government will act quickly to free us from these old regulations and enable quick growth because this sector can bring in a lot of employment, help boost economies of states and help boost tourism as well.

In the last few months we have seen aviation traffic growth slowing quite a bit. There are a variety of reasons for the same but what is your outlook for the rest of 2019?
These are temporary phenomenon. If you have seen a lot of the capacity that has been vacated by the failure of Jet Airways, has also been taken up by other airlines and you will see growth coming back because the underlying demand remains extremely strong.

In terms of fuel prices, that also seems to be moderating a little bit. We hope that aviation will pickup pace again and start to grow again. Over the month of May, we have already started to reverse some of the trends of April and we will see great growth in aviation. There is no question about that because only 30% of Indians fly today and that number is bound to increase as more and more people are shifting from trains and other modes of transport into flying.

There is great potential in the sector and as you open up new airports and new destinations, you will find that there is so much pent up demand there. I am very hopeful that the sector will continue to do well. If we can address some of the structural issues there are many years of good growth ahead of us.

Also Read

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SpiceJet chief Ajay Singh elected to IATA board

Tax structure a reason for Jet Airways fall: Ajay Singh, SpiceJet chairman

Taxation imbalances in Indian aviation sector need to be corrected: SpiceJet chief Ajay Singh

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