AI will have to fund fleet acquisition

Cash-strapped Air India will have to raise Rs 8,165 crore (Rs 81.65 billion) out of its own resources or borrowings to fund its fleet acquisition programme as the Union Budget focused primarily on aviation infrastructure development, giving a total budgetary support of Rs 190 crore (Rs 1.9 billion).

The National Aviation Company of India Ltd (NACIL), which did not get any budgetary support, will have to meet all of its Rs 8,165 crore investment from internal and extra budgetary resources (IEBR), with the Civil Aviation Ministry and other PSUs under it getting a total support of Rs 190 crore only.

Air India has been seeking equity infusion and soft loan from the government to help it meet growing expenses mostly relating to fleet acquisition and interest payments.

The 2009-10 outlay for the Ministry was Rs 12,165 crore (Rs 121.65 billion), compared with Rs 10,031 crore (Rs 100.31 bilion) and a revised outlay of Rs 7,490.06 crore (Rs 74.90 billion) in 2008-09.

The only proposal which was welcomed by the industry was on abolition of Fringe Benefit Tax (FBT).

This would incur some savings for the airlines as they were so far paying FBT on expenses incurred on hotel stay for their cabin and cockpit crew in India and abroad.

Of the total budgetary support of Rs 190 crore, the Airports Authority of India (AAI) has been allocated Rs 99.15 crore (Rs 991.5 million) to modernise non-metro airports.