Airlines want lower tax burden on pilots

Airlines are hoping for some tax relief on their pilots’ salaries.

Higher salaries and tax-free income elsewhere have for long taken pilots away from Indian carriers. In last year’s Union Budget, the surcharge on income tax was raised for individuals with total income of over ~10 million, from 12 per cent to 15 per cent. Commanders of Indian airlines normally come under this salary; to retain them, airlines bear the surcharge.

A senior government official said in their budgetary demands, airlines have asked for abolishing the surcharge or give an exception where this tax is borne by the employer.

“Indian carriers are grappling with pilot shortage and trying to stop them from migrating abroad. They have opportunities across the world; in West Asian carriers, income is taxfree,” said an executive of a private airline.

Etihad, Emirates and Qatar Airways have hired at least 100 pilots in the past six months, offering higher pay. So much so that the Federation of Indian Airlines persuaded aviation regulator DGCA to increase the notice period for commanders wishing to leave their job, from six months to one year. “The surcharge puts an additional tax burden of ~92,700 on individuals having a net taxable income of ~10 million,” said Ashok Munjal a Delhi-based financial planner. With the surcharge hike, the tax rate for the

highest slab jumps to 35.5 per cent.

Indian airlines have this problem even as they add capacity at a fast pace. Additional training and flying hours are required for a first officer to convert to a commander. Commercial Pilot Licence holders with a rating for 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 a minimum 1,500 hours of flying. A first officer can get upgraded to a commander’s post in three to six years, depending upon an 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 for 923 aircraft. SpiceJet, looking to hire commanders for its Boeing 737 NG and 737 max fleet, has more than 200 aircraft on order, to be delivered from June next year. Vistara is likely to place a 100-aircraft order as it becomes ready to fly abroad from the middle of 2018.