The International Air Transport Association (IATA) feels that the Ministry of Civil Aviation should intervene and review the proposal of the Delhi International Airport to increase airport charges by 740 per cent. IATA feels this could worsen the crisis in the Indian aviation industry.
Even though the Airport Economic Regulatory Authority subsequently pulled down the proposed hike to 340 per cent, which is to be implemented in two stages, Delhi will still become the world's most expensive airport if this were to happen, it feels.
“India's aviation industry is sick. Adding a $ 300 million headache to it (with the hike in airport charges) will put it in the intensive care from a cost perspective. And it is also estimated that a 5-7 per cent decrease in demand will result,” Mr Tony Tyler, IATA Director-General and CEO, said in a presentation at the India Aviation 2012 here today. He pointed out that “even though we are discussing Delhi, we are also keeping a watchful eye on Mumbai to avoid any similar proposals.”
Foreign investment
On the proposal to allow 49 per cent foreign investment for Indian airlines, Mr Tyler said although this aligned with the general practice globally, this initiative is not a panacea for Indian aviation.
“Without addressing the other three pillars of costs, taxes and infrastructure, this may only be a theoretical exercise. For, under current conditions, the odds are stacked against any investor making a positive return on investment in the Indian aviation sector. No one is likely to come forward unless they see themselves making a profit,” he pointed out.
Europe has chosen a “go-it” alone regional approach with the inclusion of international aviation in the European Union Emissions Trading Scheme (EU ETS) from this year.
This, according to Mr Tyler, is driving a discord. “Because non-European States, India included, see the intention to tax non-EU airlines for emissions over non-EU territory as an attack on their sovereignty,” he pointed out.