India aviation outlook: Union General Budget 2010/11

India’s financial year 2009/10 is drawing to a close - and not a minute too soon for many of the country’s beleaguered airlines. In the shadows of a new year, which brings some hope of an improving earnings environment for the sector, the Indian Ministry of Finance (MoF) has announced the Union General Budget 2010/11, and there is a sting in the tail. Highlights for the Indian civil aviation sector include budgetary support for the Ministry of Civil Aviation (MoCA), Air India and the Airports Authority of India (AAI). However, this budget is not just a financial provision for the sector in the coming year. There are now two additional imposts on the aviation sector – most significantly, the budget has extended the application of 10% service tax to all air travel and applies a 5% excise duty on aviation turbine fuel. [3933 words]

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This report contains the following subheadings:

• Highlights of the 2010/11 budget for the civil aviation sector
• Service tax generates negative reaction, Aviation Ministry to take up the issue with the Government
• Service tax furore
• Domestic passenger traffic up 15.8% in Feb-2010
• Full service carriers lose market share to domestic low cost rivals
• New low cost entrants, including AirAsia increase pressure for Indian LCCs to launch international
• Air India expects to receive USD430 million by the close of this fiscal
• Budgetary support for AAI reduces pressure to generate additional funding
• Outlook: Strong economic growth will support the expansion of the Indian civil aviation sector

This report contains the following charts and tables:

• Budget support for Indian civil aviation sector: 2010/11
• Negative reactions to budget for the Indian civil aviation sector: 2010/11
• Positive reactions to budget for the Indian civil aviation sector: 2010/11
• Indian carriers domestic passenger numbers and passenger number growth: Feb-09 to Feb-2010
• Kingfisher Airlines passenger numbers and passenger number growth: Feb-09 to Feb-2010
• Indian carriers seat factor: Feb-2010
• Indian domestic LCC capacity (seats) share as % of total capacity (seats): 2001 to 2009
• Indian international LCC capacity (seats) share as % of total capacity (seats): 2001 to 2009
• Indian carriers domestic market share: Feb-2010
• % of on-time departures by foreign carriers: Feb-2010
• % of on-time arrivals by foreign carriers: Feb-2010
• Air India operating profit/loss: FY1997/98 to FY2008/09 in INR
• AAI non-operational airports: Dec-2009