SME Times News Bureau | 14 Aug, 2018
Industry body ASSOCHAM said that the aviation,
the sector which was showing an immense promise till about a year ago, is
facing head winds with most of the airlines battling a survival issue, hit by
rising fuel costs and other expenses even as a cut - throat competition is
making the aviation firms bleed.
Expressing concern over the sector slipping
into a worsening financial situation, week on week, the ASSOCHAM said airlines
need a hand -holding across the board,
irrespective of their status -whether they are in the private or public sector.
"While the government is injecting funds
into Air India, the private sector airlines can be given support by way of
reduced taxation on the aviation turbine fuel and a host of other levies by the
Centre and the state governments, "the ASSOCHAM Secretary General D S
Rawat said in a statement.
"It is a highly employment-oriented sector, which
needs to be protected" he said.
He said aviation firms which were commanding
a fair valuation in the stock market till about a year ago, are attracting a
least amount of interest among the investors, resulting into a massive erosion
between 15 and 35/40 per cent in their market capitalisation.
"This has resulted in the inability of
the operators to raise any fresh resources either through the equity or even
the debt routes. While equity is not commanding much of valuation, the debt is
becoming even more expensive," he added.
ASSOCHAM said if the sector does not improve
as a whole, it would be a long haul before Air India could be nursed back to health and put on offer for
privatisation.
"Even the schemes like UDAN, which are
good innovative services for making the air travel affordable , would be
impacted by the deteriorating health of the sector," the chamber said ,
seeking a thorough policy review as regards the taxation and other levies are
concerned.
Seeking
support from the Aviation Minister Suresh Prabhu, the ASSOCHAM said there is a
huge cascading effect of the worsening health of the airlines.
"The entire value chain - be it the
flying operations or the downstream services like airport operations and then
the ground fleet, the impact is felt all across,". Rawat said.
He
said, the crude oil prices hold the key, but it does not seem to be declining,
if not scaling up any further.
"Every time, there is a slight
geo-political problem in the Middle East, the first sector to be hit is the
aviation," the ASSOCHAM said, the "tail winds have turned into head winds,"
he added. .