IATA: Restoring Indian Aviation Competitiveness

15-Mar-2012 The International Air Transport Association (IATA) called on India to develop a common vision for Indian aviation expressed in a National Aviation Policy with a strong implementation plan."Indian aviation has tremendous potential to drive economic growth in the sub-Continent. But to realize this, India needs a common vision for aviation-expressed in a National Aviation Policy strongly linked to an implementation plan. Such a policy would need to re-build competitiveness by addressing the difficult issues of tax, cost, investment and infrastructure," said Tony Tyler, IATA's Director General and CEO in a keynote address at the India Aviation 2012 conference, noting considerable ground work already done by the Ministry of Civil Aviation (MOCA) in consultation with industry stakeholders.Aviation is responsible for 0.5% of India's GDP and supports 1.7 million jobs. And people on average in India make 0.1 trip per year, or one trip by air every 10 years, compared to 1.8 times per year in the US. "Aviation's contribution to the India economy could be much more. If India's 1.17 billion people traveled at the same frequency as in the US, a market of 2.1 billion travelers would be created. Even one-third of that would be an air travel market of about 700 million, rivaling that of the US," said Tyler.Tyler suggested a four pillar agenda to build competitiveness:Taxes: Tyler highlighted the damaging effects of jet fuel taxes in India. All fuel is subject to an 8.24% excise duty and domestic flights face state fuel taxes of up to 30%. As a result, fuel represents an average of 45% of operating costs for India's airlines, compared to a global average of 32%. "The high cost of jet fuel has been hijacking the competitiveness of the Indian air transport industry for over a decade. It is now clearly recognized by all that fuel taxes are sucking the life blood from the Indian aviation sector. The industry is now in crisis and we need a coordinated effort among all Ministries-at national and state levels-to restore competitiveness," said Tyler. Tyler also urged the removal of Service Tax on both tickets and on services that airlines purchase, to align with international principles and boost competitiveness.Infrastructure: Tyler highlighted the need for capacity expansion in Mumbai. "Mumbai is bursting at the seams. The first phase was meant to open in 2014 but construction has not even begun. Land acquisition is not yet complete. We need a coordinated effort across all government ministries to facilitate success without further delay-as was achieved for the opening of Delhi's new terminal," said Tyler.Cost: Tyler urged MOCA to intervene in the discussion of proposed charges increases at Delhi International Airport. "The new terminal and third runway have been a much needed boost. But if the 340% increase in charges over the next two years is implemented, it will make Delhi the most expensive airport in the world-and destroy its competitiveness," said Tyler.