India should act fast to cut costs for carriers: IATA Chief
07 Oct 2008
India need to step up its pace of action to reduce costs for carriers, improve infrastructure and adopt global standards, IATA chief Givonani Bisignani.
Addressing a conference organised by the Confederation of Indian Industry (CII) conference in New Delhi recently, the International Air Transport Association (IATA) director general and CEO said the global crisis resulting from high oil prices and declining traffic was hitting India hard.
He said India's growth has virtually come to a standstill, from the 33 per cent in 2007 to a relatively low 7.5 per cent during the first six months this year. He said the last two month had posted negative growth, while warning that Indian carriers could post $1.5 billion in losses in 2008.
Bisignani said that three areas should be accorded priority, including cost reduction, infrastructure improvement, and the adoption of global standards.
He said it was 58 per cent more expensive to buy aviation turbine fuel (ATF) in Mumbai than in Singapore, with excise duties, throughput fees, and state taxes of up to 30 per cent result in a cost structure that cannot support a competitive industry. He recommended the removal of excise, implementing a standard four per cent state tax for domestic fuel, and greater transparency in overall pricing as the immediate points of action.
Bisignani said that India's service tax on premium class tickets, overflight, landing and airport charges are in contravention of the Chicago Convention, as taxing overflight charges breaches India's international obligations under the convention. He said taxing premium class tickets and airport charges are contrary to the International Civil Aviation Organisation's (ICAO) resolution calling for reduction in taxes, and together these form ''embarrassments for a country that is a long-standing member on the ICAO Council.''
He also said that global standards should be at the fulcrum of India's aviation policy but the country has taken a major diversion in security.