IATA director general and chief executive Alexandre de Juniac has called on New Delhi to address the country’s infrastructure and regulatory issues in order to allow the airline industry to meet its growth potential over the next 20 years.
Delivering an address at an industry conference in Delhi, de Juniac noted that despite huge demand, airlines in India have struggled to earn sustainable profits.
“India’s social and economic development needs airlines to be able to profitably accommodate growing demand. We must address infrastructure constraints that limit growth and government policies that deviate from global standards and drive up the cost of connectivity,” he says.
De Juniac called for particular action to make Mumbai’s Chhatrapati Shivaji International airport more efficient in the short-term as nobody expects Navi Mumbai to open in 2019 as planned.
With the number of passengers set to treble to around 500 million by 2037, de Juniac pushed New Delhi to develop a “comprehensive and strategic masterplan for its airport infrastructure” and offered IATA’s support to do so.
“It is clear that India has the capacity to develop effective infrastructure. But the job is not done. Passenger numbers will grow. And infrastructure must not be a bottleneck in fulfilling the needs of travellers and the economy.”
The IATA chief also pointed to issues including the imposition of goods and services taxes on international tickets, excessive taxes and excises on jet fuel, and a lack of competition among fuel providers that heap “excessive costs” on Indian carriers.
“Fuel taxes and duties increased fuel costs in some states by 30%, and along with limited competition, is part of the reason why it makes up around 34% of Indian carriers operating costs. That compares to the global average of 24%.”
IATA has also criticised New Delhi’s proposal to make per passenger concession fees the main bidding parameter for evaluating new airport projects, in a move away from its focus on revenue sharing.
“We believe that it makes no sense to fix a per passenger yield at the outset of a concession contract that is set to run for four decades,” says de Juniac.
“Flexible parameters should be set that are regularly reviewed by a regulator. And we know from bitter experiences in Brazil, Australia and elsewhere that selecting the company that simply proposes the highest concession fee does not yield good long-term results.”
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