Higher salaries and tax-free income from West Asian and southeastern airlines have for long snatched pilots away from Indian carriers. Now, a surcharge levied by the Indian government on high-income individuals is proving to be a burden. Airlines now hope that the upcoming budget will give them relief.
Finance minister Arun Jaitley, in the last budget, had proposed to increase the surcharge on income tax for individuals with a total income of over Rs 10 million from 12 per cent to 15 per cent. Commanders of Indian airlines normally fall under the Rs 10 million salary bracket and have to pay the surcharge. But in order to make their salary package attractive, airlines bear the expense of surcharge.
A senior government official said that in their budgetary demands, airlines have asked for abolishing the surcharge part or give exception to companies where this tax is borne by the employer.
“Indian carriers are grappling with the pilot shortage and to stop them from migrating abroad, they have opportunities across the world primarily from West Asian carriers where income is tax free, airlines have no choice but to bear the extra burden of surcharge in addition to the tax,” said an executive of a private airline.
India has been a favourite hunting ground for cash-rich middle eastern carriers. Etihad, Emirates and Qatar Airways have been combined hired more than 100 pilots in last six months offering fat pay cheque. The shortage was so alarming that the airline lobby group Federation of Indian Airlines (FIA) persuaded aviation regulator DGCA to increase notice period for commanders from six months to one year.
“The surcharge puts an additional tax burden of Rs 92,700 on individuals having a net taxable income of Rs 10 million,” said Ashok Munjal a Delhi-based financial planner, adding that due to the surcharge hike, the tax rate for the highest slab jumps to 35.5 per cent.
Indian airlines are suffering from an acute shortage of commanders even as they are adding capacity at a fast pace. The reason is the additional training and flying hours required for a first officer to convert to a commander. CPL holders, with a rating on a particular aircraft, need to undergo three to six months training before being selected as first officer. The licence examination for the post of commander requires minimum 1,500 hours of flying. A first officer can get upgraded to a commander’s post in anywhere between three to six years, depending upon airline’s training requirements and would have at least flown 2,500 hours before taking the post.
According to aviation consultancy firm CAPA, Indian airlines currently have an order book of 923 aircraft. SpiceJet, which is looking to hire commanders for its existing Boeing 737 NG and 737 max fleet, has more than 200 aircraft on order that will be delivered from June next year. Vistara is likely to place a 100 aircraft order as it becomes ready to fly abroad from middle of 2018.