IATA calls on Indian government to help aviation
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IATA has called on the Indian government to do more to help the country’s aviation sector.
The airline association believes that a “comprehensive policy” for aviation needs to be developed, as India moves towards becoming the world’s third biggest aviation market.
“Already aviation and aviation-related tourism support seven million Indian jobs and US$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,” said Tony Tyler, IATA’s director general & CEO.
“While demand growth is robust and some airlines are generating profit, sector-wide losses for India are still expected to exceed US$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.”
Tyler was delivering a keynote address at the Aviation Day India, organised by IATA, India’s Ministry of Civil Aviation (MoCA) and the Confederation of Indian Industry.
He used the event to highlight three areas that need to be improved: taxation, fuel pricing and allowing the Airports Economic Regulatory Authority (AERA) to work independently.
In terms of taxation, Tyler said the existing service tax should be removed for services rendered outside of India, and that the incoming GST regime should follow international treaties that protect airlines from double-taxation.
On the issue of fuel pricing, Tyler urged the government to grant “declared goods” status for jet fuel which would limit taxation. Indian state taxes on jet fuel can be as high as 30%.
Finally, IATA called on India to let the Airports Economic Regulatory Authority (AERA) do its work independently. Currently, legal challenges are preventing the AERA’s recommendation for a 78% reduction in Delhi’s airport charges from being implemented. And IATA also called for India to “carefully assess” the proposed privatisations of Jaipur, Kolkata, Ahmedabad and Chennai airports.
“Regulation is also holding back the development of the sector. Well-intentioned regulations, but which are inconsistent with global standards, make doing business in India very difficult for the airlines. India imposes rules and requirements that are not seen anywhere else,” said Tyler.
“India needs smarter regulation. This essentially means taking a business-like approach to regulation using common-sense and proven principles. These include targeting regulation to address real issues, using global standards where they exist, satisfying a rigorous cost benefit analysis and consultation with industry. If we can work together to build regulations that meet the public interest, are consistent with global standards and which can be implemented efficiently then we are all winners. And we will avoid the angst involved in unwinding mistakes,” he added.
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