AirAsia India will not pass on GST burden to consumers

Airlines says leasing cost will go up to Rs 10 cr due to levy on imports and GST on lease rentals

Last Updated : Jul 04 2017 | 7:43 PM IST

AirAsia India is not hiking fares, despite an increase in leasing costs under the new goods and service tax (GST) regime, rolled out on July 1.

Airlines have raised the issue of dual taxation on aircraft leases, that is, the levy on import of aircraft and GST on lease rentals. AirAsia India says its leasing cost will go up by around Rs 10 crore for each aircraft. “There is an anomaly. We have made a presentation to the government on this. We are not passing the charges to customers and hope the issue will be sorted out,” said the airline's managing director, Amar Abrol.

AirAsia India commenced operations in June 2014 and at present, has a market share of around 3 per cent. The airline inducted its 11th aircraft on Tuesday and announced the launch of Bhubaneshwar as its sixteenth destination from August onwards.

In the next two weeks, the airline will offer its passengers through check-in on domestic and international flights on payment of a fee. Though check-in is common among full-service legacy airlines, yet AirAsia India passengers had hitherto been collecting bags at the transit airport and check-in again for the connecting flight to the destination.

“We are working towards profitability. We are investing heavily in the market and plan to add three more aircraft this year. We also plan to become a 20-aircraft fleet by next Diwali,” he said. The focus will be on increasing frequencies in existing markets, he said.

While the first set of aircraft were leased from its Malaysian parent, AirAsia India has started inviting bids for leases. The airline plans to do the same for an aircraft overhaul too.

Abrol said the airline is looking at “controlled expansion” in India and is not seeking capital infusion from promoters. “We have the lowest unit costs among all airlines in India and our unit revenue is, growing too. Around 60-70 per cent of our routes are profitable at a gross level. We have the highest fleet utilisation of 14 hours in the Air Asia group,” he said.