Budget 2017: mixed reaction in aviation and tourism industries

The Dollar Business Bureau

India’s aviation and tourism industry viewed the Union Budget 2017 as pro-growth and pro-poor budget, covering a wide sphere of the industry. They, however, felt that the Finance Minister could have made substantial announcements to make these two industries globally competitive.

There were some positive reactions from the industry. KPMG Partner and Head (Aerospace and Defence) Amber Dubey who said that the government’s decision to develop, maintain and operate selected AAI airports in Tier 2 cities through PPP mode is a welcome step. “It will bring in greater efficiency, best practices and accountability. Higher commercial revenues will help reduce aeronautical charges and make flying more affordable," Dubey said.

On Wednesday, Jaitely in the budget speech said the AAI framework will be modified to ensure successful 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.

Expressing Jaitley's budget, Deloitte Touche Tohmatsu India Partner Peeyush Naidu said, “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.”

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 tra nsmission 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."

There were, however, some disappointments in the travel and tourism industry. BigBreaks.com CEO and Managing Director Kapil Goswami said the budget has been a disappointment for 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 feel dejected that the government paid no heed to them," Goswami said.

He highlighted that governments across the world provide significant incentives and tax benefits to the travel industry. However, the Indian travel industry still remains a highly taxed sector, making it uncompetitive in the global tourism markets.

Meanwhile, Thomas Cook (India) Limited COO Mahesh Aaiyar said the budget had very little for the tourism sector and he was eagerly looking forward to the launch of Incredible India 2.0.