The Hindu Business Line : IATA seeks reduction in domestic aviation fuel cost

(From right) Mr Giovanni Bisignani, Director-General & CEO, International Air Transport Association; Mr Ankur Bhatia, Executive Director, Bird Group; and Mr Wolfgang Prock Schauer, CEO, Jet Airways India Ltd, at an interactive session in the Capital Wednesday. —

Our Bureau

New Delhi, Sept 24

With the domestic airline industry likely to post a loss of $1.5 billion this year, the International Air Transport Association (IATA) has called on the Government to “wake up” to the crisis and take steps to reduce taxes and bring about reforms in the sector.

Addressing a luncheon meeting, the IATA Director-General and Chief Executive Officer, Mr Giovanni Bisignani, pointed out that the losses reported by the Indian aviation industry were second only to the losses reported by the US industry.

“The situation of India’s aviation sector is volatile and with growth of just 1.9 per cent this July, against 7.3 per cent last year, it will post a $1.5 billion loss this year,” Mr Bisignani said at a meeting organised by the Confederation of Indian Industry (CII).

High cost of ATF

The IATA chief called on the Government to take steps to reduce the domestic cost of aviation turbine fuel (ATF) by looking at the high tax regime that exists for the fuel. Currently ATF accounts for 45-50 per cent of the operating cost of most airlines.

“India is among the most expensive places to buy ATF. In August, it was 58 per cent more expensive to buy the fuel in Mumbai (for domestic flights) than in Singapore. Removing excise tax, implementing a standard 4 per cent state tax for domestic fuel and greater transparency in overall pricing are all urgently needed,” Mr Bisignani said.

While welcoming the setting up of a high-powered committee to look into the problems faced by the industry, Mr Bisignani said he was worried about the speed of decision-making. “Here the decision making process is slow and situation does not wait for the recommendation of committee because aviation is a fast growing industry,” he said.

Calling on India to think big, the IATA chief emphasised on faster development of infrastructure in the country. “Delhi is improving but the condition of Mumbai is critical. It is handling 24 million passengers and by 2021 it will go up 40 million, but its cross runway configuration is a limitation, with no possibility of parallel runway. The situation is not good,” Mr Bisignani said.

The IATA CEO also asked the Government to separate Air Traffic Control services from the Airport Authority of India, in order to manage the air traffic well and reduce carbon emission.

“There is urgent need for upgradation and modernisation of ATC. Every one minute delay in landing or take off costs around two million dollars to the airlines and emits 2,00,000 kg of carbon-di-oxide,” Mr Bisignani said.