Budget likely to ease merger of private airlines

New Delhi: Budget 2008-09 may come up with fiscal measures to encourage consolidation among private players in the domestic aviation sector.
Indications are that the Government would make available the benefits of carry-forward and set-off of accumulated losses and unabsorbed depreciation to private-sector airline operators going in for a merger with other such entities.
At the moment, such a benefit is available to the amalgamation of one or more public-sector company/ companies engaged in aircraft operation with one or more public company/ companies in a similar business.
Official sources told Business Line that the Budget proposals are likely to extend the benefits of Section 72A of the Income-Tax Act to the merger of Jet Airways with Air Sahara and to Kingfisher Airlines’ buyout of Air Deccan.
The Finance Act 2007 extended the benefits of carry-forward and set-off of accumulated losses and unabsorbed depreciation available to amalgamation of one or more public-sector companies to facilitate the merger of Air India with Indian.
This was done by amending provisions 72A of the Income-Tax Act. Both Air India and Indian have accumulated losses on their balance sheets.
10/02/08 Ashwini Phadnis/Business Line

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Categories: Indian Aviation- In General Feb 2008