IATA urges Indian government to save ailing aviation industry

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The International Air Transport Association (IATA) has called on the Indian government to quickly step in and save the country's ailing aviation industry.

There is a need to increase competitiveness through cutting taxes and costs, building airport infrastructure and allowing foreign carriers to invest in local airlines, Tony Tyler, IATA's director general and CEO, said at the India Aviation air show.

Although the government has allowed airlines to directly import jet fuel, there is a need to come up with a national access regime to allow airlines access to critical fuel infrastructure at reasonable prices.

The competition commission of India and the petroleum ministry "have not yet mandated access to off-airport transport and storage infrastructure", he said, adding that the high taxes are "sucking the life blood" from the aviation sector.

Tyler also called for the removal of the 10.3% service tax on air tickets and services such as landing and air navigation fees.

To reduce costs, Tyler also wants the government to step in and stop Delhi International Airport Ltd (DIAL) from implementing an "unacceptable" 340% increase in airport charges.

DIAL had initiated proposed a 740% increase, but that number was knocked back by the airport economic regulatory authority to 340%, to be implemented in two stages.

"India's aviation industry is sick. Adding a $300 million headache to it will put it in intensive care from a cost perspective," said Tyler, urging for a keen eye to be kept on Mumbai airport to prevent a similar proposal.

A review is also needed on the charging structure for international and domestic flights. He questioned the need for different charges, since the aircraft use the same airport and runway.

Tyler also hit out at the delays in the Navi Mumbai project, adding that its two proposed runways and 60 million passenger capacity is "badly needed" for the country's capital. The first phase of the project had been scheduled to be opened in 2014, but land acquisition has not even been completed and construction has not yet started.

"Even with the recent expansion, the facilities at Mumbai are bursting at the seams. Navi Mumbai is not an option. It is critical," he said.

Tony also urged the country's cabinet to allow foreign airlines to invest and hold up to 49% stakes in the country's carriers.

However, without addressing costs, taxes and infrastructure issues in the country, foreign investors are unlikely to step in, he added.

The Indian market is growing 12% domestically and 9% internationally, about twice the global average. IATA, however, forecasts that Indian carriers will continue making huge losses in 2012.