Monday, February 28, 2022

Bring ATF under GST ambit, on course to set up logistics platform as a separate company: Ajay Singh

SpiceJet Chairman and Managing Director, Ajay Singh has yet again called for bringing in ATF under the GST ambit. The carrier will be inducting 15-20 flights in its fleet, while it is on course for spinning off its cargo operations into a separate company.   Speaking to BusinessLine on the sidelines of an Assocham programme, Singh said geo-political tensions following Russian invasion of Ukraine will lead to further shoring-up of crude prices thereby piling up cost pressure on the sector.   Continued cost pressure and high taxation incidence will lead to a corresponding hike in air fares.   “Crude has already crossed $100 a barrel level and this is at record high levels. The high taxation will only impact our headline operations. So taxation has to be at levels where it does not exert additional pressure. So states must work towards it and ATF needs to be brought under GST, “ he said. Air Turbine Fuel or ATF accounts for nearly 30 per cent of airlines operating costs.   “Only increasing air fares will impact demand at some point of time,” Singh said. He is also the Vice Chairman Designate of Assocham.   Air passenger demand, post-Omicron, is bouncing back and is currently at 75 per cent of pre-Covid levels.   SpiceJet’s induction of 15-20 new aircrafts in it’s fleet is expected over the next few months. Aircrafts will be leased. “A significant number of these airlines will fly on international routes, as and when they are opened, “ Singh said.   Scheduled commercial international flights to/ from India continues to be suspended till date since the outbreak of Covid and India going into a lockdown in 2020.  

According to him, SpiceJet is also looking at listing of it’s cargo arm, SpiceXpress. Spinning-off the cargo division into a separate entity is already begun and it is likely to be completed in the next two to three months. In Q3FY22 (Oct–Dec), the logistics segment reported a 17 per cent increase in revenue to the tune of ₹584 crore and a net profit of ₹67 crore. The company plans to significantly increase freighter capacity in coming quarters. The company is also experimenting with drones and is experimenting delivery mechanisms in select categories.   “Listing requires some SEBI conditions to be fulfilled. But the process, where the (cargo) unit is separated from the parent, is on and it is likely to be completed in the next two to three months,” Singh said.

28/02/22 Abhishek Law/Business Line

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