Aircraft maintenance may get cheaper

Feb 29, 2016, 07:36 IST | Neha LM Tripathi

Aviation experts believe lowering tax in this year’s Union Budget will help expand the country’s maintenance repair and overhauling industry and create around 7,000 jobs

While a journey in an aircraft costs you thousands of rupees, the same planes burn fuel and fly abroad without a single passenger on board for maintenance and periodic overhauling, to avoid paying huge amounts on maintenance and overhaul taxes and surcharges here. But this is expected to change.

Every aircraft undergoes mandatory periodic checks according to DGCA rules. File pic
Every aircraft undergoes mandatory periodic checks according to DGCA rules. File pic

Sources in the aviation ministry said Finance Minister Arun Jaitley, in the Union Budget that will be announced today, may grant relief in taxes concerning Maintenance Repair and Overhauling (MRO) of aircrafts and its components.

Senior aviation officials said at least 15 per cent relief is being expected in service tax and 29 per cent in custom duty levied on consumables and tools used for MRO.

Since fuel prices are currently fluctuating, civil aviation authorities feel that any reduction in MRO components might help bring down fares by Rs 2,500-4,000.

Every aircraft undergoes mandatory periodic checks according to Director General of Civil Aviation (DGCA) rules. “At present the cost of maintenance is very high. Any respite in that would help convincing airlines to not go abroad. Only 10 per cent of the total international MRO market is in India,” said an aviation official. Sources added that air carriers like IndiGo, Jet Airways and SpiceJet get their MRO done abroad while GoAir only gets its components repaired here.

Moreover, this change could also create 7,000 jobs in maintenance alone and save money spent on sending empty aircrafts abroad as it costs around $800 million (Rs 5,498 crore) annually.

RN Johri, chief managing director of Aman Aviation, said, “We are confident that government is seriously working towards providing us a level playing field, which would help in generating employment for the skilled workforce and bring down the cost incurred, which will ultimately benefit the common man. Also, it is likely that the government may direct the airlines to get all the Indian registered planes and components to be serviced within the country.”

Airlines await boost in international operations
>> Only India has the 5/20 mandatory rule, in which a new airline either has to wait for five years or have 20 aircrafts to commence its international operations

>> This rule has obstructed the expansion of new airlines like Air Vistara and Air Asia 

>> Experts want this rule to be disbanded to bring in fierce competition and allow fares to go down

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