‘India is a huge opportunity for airlines, but difficult to operate in’

Tony Tyler, Director General and CEO of International Air Transport Association (IATA), is a 37-year veteran of the aviation industry and was the Chief Executive of Cathay Pacific Airways before taking over at IATA in 2011. He recently spoke to BusinessLine in Geneva, a day after giving a promising outlook for the aviation sector for 2015 at the IATA Global Media Day. Excerpts from the interview.

How do you see the Indian market in the global aviation map?

India is a huge opportunity for airlines but it is a difficult place to operate in because infrastructure is inadequate and it is expensive to operate in India.

Taxes are high and there are a lot of complicated regulations here, which makes life difficult for airlines.

There is lot of interest in Indian aviation and there is ambition in Indian carriers to grow, serve the market well and to invest. What we need is a supportive government to help that happen. I’m optimistic with the new government.

What in the new government makes you optimistic?

The government has announced it wants to make India an easier place to invest in and wants to cut away the red tape and help businesses grow to develop the economy. (Prime Minister ) Modi is making all the right noises. So one hopes that throughout the bureaucracy, the message is taken and applied.

The government has announced its intention to privatise AAI, Air India and Pawan Hans. Are these steps in the right direction?

Privatisation isn’t a panacea and doesn’t solve all problems.

There have been successful airports owned by government, and successful airports owned by private companies. At the same time, there have been expensive and inefficient airports owned by both, the government and private enterprise.

So the important thing is the right model and right concessions to make sure that the charges that airlines give are reasonable and that the right incentives are there to invest.

There is a particular temptation when governments are privatising. They want to sell the airport but they still want to get a lot of money from it. This is the example in Delhi where I believe the 43 per cent of revenue has to be shared with the government. Forty-three per cent is much too high.

If you are taking away all that money from the top and the owner of the airport, GMR, has to make a return, it will have to charge more to make some money. So where is the money coming from? From the airlines. So the government shouldn’t be greedy about that.

There are a lot of good reasons for privatisation. It brings commercial discipline, commercial flair and it helps free the airport from the dead-hand of government decision-making.

But government can’t expect it to have its cake and still be able to eat it.

After the grounding of Kingfisher, we are facing the prospect of SpiceJet going down. What should the government do to help turn around the situation?

Aviation is a very competitive business. What the government could do is to get the costs down for everybody — costs of airport, taxes on fuels, service taxes on tickets and the excise duties.

But is there a problem with the business model?

Well, if airline’s cost is higher than the revenue then there is a problem.

They have to keep everything in control but taxes. You can argue that as the company is going bust there is some problem with the business model. But this is a competitive business.

The writer was in Geneva at the invitation of IATA

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