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High cost of doing aviation business in India is 'squeezing the lifeblood out of the sector'

26-Jul-2012 10:16 AM

IATA director general and CEO Tony Tyler, in his keynote address to the Confederation of Indian Industry, noted (25-Jul-2012) the "high cost of doing aviation business in India is squeezing the lifeblood out of the airline sector", adding, "infrastructure costs and taxes need urgent attention”. “India’s airports are becoming increasingly expensive,” said Mr Tyler. He noted how the Airports Economic Regulatory Authority (AERA) approved a 346% increase in charges at Delhi Indira Gandhi International Airport effective from May-2012, stating, "the increase will add over $400 million in operating costs for airlines providing connectivity to India through Delhi". He also noted, “An increase of this magnitude will impact travel demand by 5-7%. That’s bad for airlines, for passengers, for Delhi International Airport Private Limited (DIAL), for the Delhi hub, for Delhi as a city and indeed for India and its economy as a whole". He continued: "To operate Delhi’s airport, DIAL pays 46% of top line revenue to the Airports Authority of India (AAI) as a concession fee, much of which is used to subsidize other public sector airports". He claims “this is in contravention of international standards, distorts competition and compromises Delhi’s cost competitiveness". Mr Tyler also urged the Government to initiate deliberations on utilising the 46% concession fee to offset the increase in aeronautical charges and the cost for passengers. "This could be the basis for a way forward that protects the interests of DIAL, its airline customers, the fare-paying public, and the economy. And it is important that we find a workable solution soon to avoid Mumbai, with a similar concession structure, falling into the same dire situation,” he said. [more - original PR] [more - original PR - Speech]