Indias global aviation hub ambitions

INDIA has the potential to become a global aviation hub, if it is prepared to pursue polices that encourage growth, cut taxes and address ‘excessive and predatory pricing’.

Such was the general consensus of three reports conducted into the leading aviation market.

The International Air Transport Association (IATA) believes the establishment of a national aviation policy is key to restoring Indian aviation competitiveness.

“Indian aviation has tremendous potential to drive economic growth in the sub-continent,” explains Tony Tyler, IATA’s director general, in a keynote speech at the India Aviation 2012 conference.

“But to realise this, India needs a common vision for aviation – expressed in a national aviation policy strongly linked to an implementation plan.”

Aviation is responsible for 0.5 per cent of India’s gross domestic product and supports 1.7 million jobs.

According to civil aviation minister Ajit Sing, cargo handled at Indian airports has increased by 10.9 per cent in the last five years.

He also revealed at the conference that the government has brought forward its process of formulating an economic regulatory framework for an air cargo promotion policy.
 

Four-pronged approach

IATA advocates a “four-pillar agenda to improve competiveness”, which will involve addressing costs, taxes, infrastructure and direct investment by foreign carriers in Indian airlines.

Tyler cited the “damaging effects of jet fuel taxes” in the country. All fuel is subject to an 8.24 per cent excise duty and domestic flights faced additional state fuel taxes of up to 30 per cent.

“It is now clearly recognised by all that fuel taxes are sucking the lifeblood from the Indian aviation sector,” he claims.

The director general went on to emphasis the need for a capacity expansion in Mumbai.

He also urged ‘positive consideration’ of the Ministry of Civil Aviation’s (MOCA) proposals to allow up to 49 per cent direct investment by foreign carriers in Indian airlines before going on to criticise proposals to increase charges at Delhi International Airport.

“The new terminal and third runway have been a much needed boost. But if the 340 per cent 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,” warned Tyler.

The need for a strong action plan is reiterated in the Federation of Indian Chambers of Commerce and Industry (FICCI) and consulting firm KPMG’s joint report, “India: The Emerging Aviation Hub.”

It advocates an eight-point action agenda involving ‘close collaboration’ between the ministry of civil aviation and other ministries including finance, tourism and commerce and industry.

The study also champions direct foreign investment, slashing sales tax on aviation turbine fuel as well as new “government safeguards to prevent excessive and predatory ticket pricing”.

Meanwhile, a technology report published by the Centre for Aviation and air transport (CAPA) and air transport IT specialist SITA warns that even though IT is not always considered a tool of strategic importance, it will play a key role in meeting the challenge of growth in Indian aviation.

Dr Nasim Zaidi, secretary of MOCA says: “Technological innovation will be required to bring efficiency and speed to the sector.”

Despite the major overhaul clearly needed to drive India’s hub dream forward, Tyler remains optimistic the country has a promising aviation future.

“I am passionate about aviation, and I am an India optimist. IATA will be fully engaged in the team effort to turn Indian aviation into the great success story that it has the potential to become,” he concludes.

Thelma Etim