Priorities For Indian
Delhi - “The global crisis resulting from high oil prices
and declining traffic is hitting India hard. Growth has slowed from
33% in 2007 to 7.5% for the first six months of this year. And the last
two months have been negative. Indian carriers could post US$ 1.5 billion
in losses in 2008, the largest outside the US. Urgent action is
needed to help Indian carriers weather the perfect storm of high costs and
falling demand,” said Giovanni Bisignani, Director General and CEO of the
International Air Transport Association (IATA).
identified three priority areas – reducing costs, improving
infrastructure, and adopting global standards – in his address to the
Confederation of Indian Industry (CII).
Costs: “India is among the most expensive
places on the planet to buy aviation turbine fuel (ATF). In August, it
was 58% more expensive to buy fuel in Mumbai (for domestic flights) than
in Singapore (for international). Excise duties, throughput fees charged
by airport operators and state taxes of up to 30% for domestic flights
result in a cost structure that cannot support a competitive industry.
Removing excise tax, implementing a standard 4% state tax for domestic
fuel and greater transparency in overall pricing are urgently needed,”
took note of India’s Service Tax on premium class tickets, overflight,
landing and airport charges. “Taxing overflight charges breaches
India’s international obligations under the Chicago Convention.
Taxing premium class tickets and airport charges is contrary to the
International Civil Aviation Organization’s (ICAO) resolution 8632
calling for reductions in taxes. These are embarrassments for a
country that is a long-standing member on the ICAO Council.”
also questioned the lack of transparency in India’s airport and air
traffic control costs. There is an estimated 20% over-collection
for air traffic control, while international operations are charged 33%
more than domestic flights to land at India’s airports. “India must not
waste any more time in establishing an effective Airport Economic
Regulatory Authority (AERA) to achieve cost efficient infrastructure and
bring India’s charges in line with ICAO charges policies,” said
investments are urgently needed. While Delhi is moving towards the
capability of handling 100 million passengers, the situation at Mumbai
remains critical. There is no possibility to build an additional
parallel runway. The Greenfield site under consideration with a phase
one capacity of 10 million passengers a year will provide some relief,
but it is not a serious long-term solution. Mumbai needs an airport that
can adequately serve the financial capital of the world’s second most
populous nation. That means thinking much, much bigger. We must use the
breathing space of the current downturn to plan for capacity in the 100
million passenger range for Mumbai, like airports in Delhi, Seoul, Hong
Kong, Dubai and other important cities,” said Bisignani.
Standards: “Global standards have played
a crucial role in the development of air transport and should be at the
heart of India’s aviation policy and commercial development. But
India has taken a major diversion in security. The non-standard
data transmission requirements for Advance Passenger Information (API)
is an added cost burden that provides no additional benefit. This
is a serious flaw for India’s API at a time when increased cooperation
is needed,” said Bisignani.
called on India to take a leadership role in shaping aviation policies,
including environment and commercial freedoms. “In a few years, Asia
Pacific will be the largest single aviation market. India is a key driver
of that growth. India’s enormous size makes it an important market. It
also gives it a responsibility to take a leadership role on policy issues.
India must be a strong voice for a global solution on the environment, as
envisioned by Kyoto. And it must look beyond its borders to be a strong
voice for global change and greater commercial freedoms,” said
“I am an
India optimist, but my biggest concern is speed. Aviation is a
fast-changing industry that is fueling much of the Indian economic success
story. But the crisis is highlighting that India’s decision making is too
slow. India is not just a great market. It must also be a great leader.
Minister Patel has done a great job in liberalising the industry and
setting the wheels in motion for the rapid development of aviation in
India. The benefits are clear: connecting business to markets, expanding
tourism and creating jobs. Now it is the responsibility of entire
government to follow up by addressing the issues of today’s crisis with
quick decisions based on global standards and build a solid platform for
future expansion,” said Bisignani.
Giovanni Bisignani's speech