Ajay Singh, SpiceJet Chairman and Managing Director put forward a strong request in front of the government asking the centre to provide a ‘level playing field’ for Indian airlines. He highlighted that international carriers enjoy tax benefits and are therefore rendered in a better position to deal with the rising fuel prices as opposed to the domestic carriers. The SpiceJet CMD further pushed his argument by saying that domestics airlines needed to raise the prices in order to maintain a healthy trajectory in the Indian aviation industry.
SpiceJet CMD Concerned About Rising Costs
Ajay Singh said, "What's happening today is quite scary, oil prices are high for every airline in the world but in India, we are compounding the problem by also taxing the oil... Our oil is actually costing the airlines in India for domestic travel 30% more than those costing the airline around the world." Indian carriers, as opposed to the international carriers are not exempted from paying tax on oil and therefore are not able to better combat the rising fuel prices.
In front of the Civil Aviation Minister, Suresh Prabhu, the SpiceJet CMD said, "If India truly aspires to be a global aviation power, we need to get a level playing field. Give us the same cost structure, same cost base that is enjoyed by airlines across the world and then let us compete with the foreign carriers.” Firstpost reported.
Companies Need to Increase Prices: SpiceJet CMD
Ajay Singh raised the topic during a very crucial time when the industry remains plagued by problems like rising fuel prices, high operational costs and depreciating rupee. It is also noteworthy that SpiceJet registered a loss of Rs 38.06 crore in the first quarter of the current FY. The SpiceJet CMD remarked that a hike of 5-7% has not affected the demand as such and that the airlines need to increase prices in order to attain a healthy financial condition. However, it is still interesting to note that despite troubled situations SpiceJet continues to launch new flights, ample entertainment for its guests and services like SpiceMax.
The SpiceJet exec further said, "There is scope for airlines to actually raise fares and not lose much by way of demand in this market. I hope better sense will prevail and airlines will do this in the coming times because it's incredibly important that airlines are financially healthy. Because without that, the whole big revolution that we are growing on in India will lose out soon.”
Jet Airways CEO, Vinay Dube was however of a slightly different opinion as he said that the current crisis was temporary and that it would eventually subside thus paving way for healthy finances for Jet Airways and other airlines as well.
