ACI urges govt to defer aviation specific taxes till Dec 31

Airports Council International (ACI) has urged the government to defer aviation specific taxes till December 31 to safeguard airports’ operational and business continuity amid COVID-19 pandemic. In a letter to Prime Minister Narendra Modi on Tuesday, ACI Director General Angela Gittens has said COVID-19 has drastically impacted the airport business and is posing a serious threat to survival of the industry in many countries.

“Airports are the engine of your national economy in terms of jobs created and GDP growth. The airport industry in Asia-Pacific employs more than 63 per cent of aviation industry jobs, providing a variety of services. This unique resource for the society and the economy should be fully preserved and supported to prepare for its revival, as soon as the negative effect of the COVID-19 starts to decrease,” the ACI DG said in the letter, dated March 31.

ACI’s Asia Pacific arm had on March 27 estimated that the airport industry in the APAC region is expected to report USD 5.6 billion loss in the first quarter following a traffic volume loss of about 1.5 billion passengers at the airports in the region due to prolonged duration of coronavirus outbreak.

Besides, it also revised the revenue forecast for 2020, according to which the revenue impact on the aerodromes in the APAC region is expected to the tune of USD 23.9 billion, and USD 5.75 billion for the airports in the Middle-East region.

“The airport industry is equally impacted by the COVID-19 outbreak. Every passenger lost by an airline is equally a passenger lost by an airport. We would urge your authority to provide relief measures for the aviation sector to benefit all affected parties of the aviation sector and which will be strategic for the relaunch of the economy as soon as the crisis is over,” the global airports grouping said.

It requires “urgent measures — immediate suspension of national, regional, local taxes specific to the aviation sector, including passenger departing taxes, which will also incentivise passenger confidence to travel, and moratorium on new national and local aviation specific taxes until December 31, 2020,” ACI added.

Airports are reliant on revenue from charges on airlines, passengers and commercial activities, ACI said in the letter, adding, “any global alleviation of airport charges or introduction of blanket discounts, therefore, will place airport operators in greater financial distress. Any discount in charges in favour of airlines should be decided by the airport operator on a voluntary basis”.

The group has also sought from the government exceptional and time-limited waiver of the slot 80/20 rule until June-end.

The rule stipulates that airlines could lose their slots at congested airports if they did not use them at least 80 per cent of the time.

Dynamic aviation markets such as Singapore and UAE are offering dispensation of the slot 80/20 rule only for certain markets. Other countries such as the US, China, South Korea and Japan have introduced a waiver for a shorter period than the entire summer season, it said.

From an operational perspective, the aviation system would benefit from the introduction of a mandatory requirement to airlines to notify flight cancellations, resulting from structural capacity adjustments due to COVID-19 under a specific timeline in advance, and hand back to coordinators/slot pools unused airport slots within 24 hours of flight cancellations within booking systems, the letter said.

The body also urged the government to consider, on a case-by-case basis, waiving airport rents and concession fees applicable to airport operators, irrespective of ownership status, given the financial stress they are experiencing.

Such waiver could be a one-time waiver for a period of time, without the requirement for airports to pay-back the waived amounts at a later stage. This will allow airports to re-deploy these funds to continue operations and support recovery strategies, according to ACI.

It has also sought loans and secured lending facilities at preferential rates to meet fixed expenses of airports for at least the next six months and ad-hoc facility to issue additional bank guarantees besides the ability to renegotiate existing covenants.

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