Lease planes to foreign cos, but first return import duty relief: Govt

New Delhi: Domestic carriers’ move to cut capacity and improve profitability by leasing out planes to foreign airlines has been opposed by the civil aviation ministry, which has said that airlines must pay back the import duty relief they got whey they purchased these aircraft if they propose to lease them out to foreign carriers.
The remark follows Jet Airway’s proposal to dry lease three B777-300 s to Royal Brunei Airlines.
As per the existing rules, scheduled domestic carriers are exempted to pay duty while importing the aircraft for commercial operation. Operators of chartered services are, however, required to pay 17-18 % customs duty on import of aircraft.
Domestic carriers lease out aircraft to manage capacity and cut losses when traffic demand is weak. In a recent letter to the civil aviation ministry, Jet Airways’ chief commercial officer Sudheer Raghavan has said that the airline had found the need to sublease three B777-300 s as they had been rendered surplus owing to ongoing economic downturn and its impact on the aviation industry.
"The government has given exemption in case of import duty on aircraft to promote domestic aviation sector. The idea is to bring competition in the market and benefit consumers. We can not allow airlines to benefit other markets at the cost of Indian government’ money," a government official who did not wish to be identified, told ET.
01/02/10 Economic Times

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Categories: Foreign Feb 2010, Indian Aviation- In General Feb 2010