Airlines await government support due to coronavirus
Roman Denisov
Tax practice
Airlines await government support due to coronavirus

While coronavirus is spreading, there are risks of bankruptcy of air carriers, writws Vedomosti newspaper with reference to the head of the federal agency and first deputy minister of transport Aleksandr Neradko.

According to the website of the Federal Air Transport Agency, a decrease in airline revenues due to the closure of international flights with a simultaneous increase in costs while the ruble depreciates may result in such consequences.

RBC wrote about the threat of losses for Russian airlines: according to the publication, the possible losses of Russian carriers due to the suspension of flights at a recent meeting at the Ministry of Transport risk reaching 100 billion rubles.  At the same time, the interlocutor of RBC, close to the Federal Air Transport Agency, announced an assessment of losses of 70 billion rubles.

More recently, a RBC source in a Russian airline noted that “it’s not so important how much the airline will lose.  The important thing is that airlines will have to cope with the crisis on their own, because there are no state support mechanisms.”

Meanwhile, as the head of the Federal Air Transport Agency said, the agency, together with the Ministry of Transport, is already preparing a plan to support airlines, and with them – airports and other industry organizations.  A measure of assistance, RBC writes, is likely to be a reduction in charges for the air navigation services of aircraft of Russian airlines in most regions of Russia, and in the Far East and in the Arctic and on the flight routes between them, these charges will be completely canceled.

Some industry representatives expect another obvious measure – a reduction in VAT on flights from the regions to Moscow during 2020.  This will help to maintain air traffic in the country.  The VAT on flights to Moscow and the Moscow Region is 10%; for flights bypassing the capital, the tax was canceled in April 2019.

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