‘Delhi airport’s prospects of becoming a hub are very poor’

The Director-General of the International Air Transport Association (IATA), Mr Tony Tyler, is coming to India next month to convince all the stakeholders of the need to reduce airport charges. In an exclusive interview with Business Line on the sidelines of the SITA IT Summit in Brussels, Mr Tyler explained why this is important.

Excerpts from the interview:

Has the increase in charges put paid to Delhi airport’s chances of becoming a global hub?

Delhi airport’s prospects of becoming a hub are very poor. You cannot be a hub if you are a very expensive airport. The study which the airport sent to IATA to show that it is not a very expensive airport actually confirms that it is… their own numbers show that it is the most expensive long-haul airport in the world. I do not want to pick a fight with Delhi airport, but want to talk to all the stakeholders which include airports, the Government, the Airports Economic Regulatory Authority and the Ministry and see whether we can find a solution to bring down costs for airlines.

How will you do this?

One opportunity seems to be that the Delhi airport operator has to give 46 per cent of all the revenue that it collects to the Airports Authority of India (AAI). ]

Perhaps the Government can somehow find a way of rebating some of the money to the airlines or find some way of reducing that income stream to reduce the airlines’ cost of operations.

You are not talking about changing the contract? Is IATA now saying that the increase in costs for airlines must be offset with some other costs?

That will be one opportunity. I am going to India in July. This is really important to the industry.

Increasing costs 346 per cent is a problem, especially in India where, if you look at purchasing power parity — that is a lot of money … it is an expensive place. We need to find a solution.

Let us work together to make it a win-win for everybody. Being a hub is a great ambition. Geographically, it is well located, the facilities are excellent. It has all the ingredients to make it a good hub; it is just that it is not cost-competitive.

If the Government can find a way of making it cost-competitive and perhaps foregoing a bit of direct revenue, there are huge amounts of indirect benefits, in terms of job creation, high quality and value add to many industries.

Are you in favour of foreign direct investment in the Indian aviation sector?

I am in favour of liberalising access to capital everywhere. Almost every country I can think of allows foreign investment in its airlines, although most countries have a limit. In India it is zero, and that is clearly out of line with international practice. Just allowing foreign direct investment will not make it happen because any investor is going to ask: ‘where is my return for the risks on my investment? Will the returns justify those risks?’

Frankly, the Indian Government needs to adopt policies that will de-risk those investments before it makes much of a difference — airport charges, taxation and fuel.

> ashphadnis@thehindu.co.in

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