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to manage.

That is the single largest challenge for us.
Majumdar: Mr Datta do you face the same situation, and, how do airlines like yours counter this huge cost escalation?

Saroj Datta – executive director, Jet Airways: The problems are common whether they are government-owned or private-owned. The fuel prices go up and Jet Airways is as badly affected as Air India or Go Air. But I don’t fully agree with Mr Thulasidas that the establishment still does not regard air travel as a form of luxury travel.

When you look at the way the cost structure affects aviation industry, all of that results from government’s decision about how to price ATF. Whether it is import parity principles or monopoly handling. I will still call it monopoly because there are three Government owned handling agents as far as fuel is concerned. There is no common user facility, there is limited competition available. How much does the aviation fuel, state level fuel tax contribute to each state’s revenues. If you were to look at it in absolute terms, it forms a very small proportion of their remunerables. When I say very small, it is in relative terms. It is different for Maharashtra, it is different for a small state. There is no desire on the part of the Central Government and largely the Ministry of Finance because it is an automatic revenue source.

Thukral: As a consultant to the industry, can you give some insight into how these issues can be addressed?

Kapil Kaul – CEO, Indian Subcontinent & The Middle East (CAPA): India operates in a cost environment. The cost has escalated almost 300% on every parameter since 2003-2004. Airline profitability is central to how aviation in this country is possible. If you look at it we have a very negative physical regime for airlines. We were addressing issues like high fuel taxation, airport usage charges being very high with holding taxes, customs and other duties. Most of the decision is outside the purview of the Ministry of Civil Aviation. I have been to the CIA National Committee and we have met with the Finance Ministry many times.
If you talk to them about giving any concession to the aviation industry they say it will affect telecom or other infrastructural issues. So we don’t understand that this industry has very special needs and it needs to be addressed absolutely differently from what others have.