The International Air Transport Association (IATA) has called for the development of a comprehensive policy for aviation aligned with the Indian Government’s stated intention to make it easier to do business in India.
The objective is to allow India to derive maximum social and economic benefits as its aviation market grows to become the third largest in the world. That is expected to happen in 2029 when the number of travelers to, from and within India will near 280 million annually.
“Already aviation and aviation-related tourism support 7 million Indian jobs and $23 billion of India’s GDP. The healthy growth of the sector has the potential to expand these benefits tremendously. But there are immense challenges which must be overcome—as seen in the sector’s financial performance. While demand growth is robust and some airlines are generating profit, sector-wide losses for India are still expected to exceed $1 billion this year. Onerous regulation and processes, debilitating taxes and expensive infrastructure are holding back the industry’s ability to deliver greater economic benefits to India,” said Tony Tyler, IATA’s Director General and CEO.
Tyler was delivering a keynote address at the Aviation Day India organized by IATA together with India’s Ministry of Civil Aviation (MoCA) and the Confederation of Indian Industry. In his address Tyler highlighted three priority areas where work is needed to reduce costs in India:
Allowing AERA to do its work: Tyler highlighted the importance of allowing the Airports Economic Regulatory Authority (AERA) to do its work independently. He called for action in three areas:
Overcome legal challenges which prevent AERA’s recommendation for a 78% reduction in Delhi’s airport charges from being implemented.
Protect the independence of AERA and the principle of a “single till” for airport charges in light of stock exchange filings which show that the Ministry of Civil Aviation had instructed AERA to use a hybrid till for its “independent” determination of airport charges at Hyderabad.
Carefully assess the proposed privatizations of Jaipur, Kolkata, Ahmedabad and Chennai to ensure that the “single till” principle is maintained and that the privatization terms are appropriate to the level of development at the airports. Significant public investment in these airports should be considered in a cost/benefit analysis aimed at determining if the public interest would be best-served by a concession contract or a management contract.