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  1. Poor infrastucture, high taxes determine foreign airlines from investing: IATA

Poor infrastucture, high taxes determine foreign airlines from investing: IATA

Poor aviation infrastructure and "difficulty" in doing business like high taxes and regulations have deterred foreign airlines from investing in Indian carriers, the chief of global airlines' body: IATA.

By: | Miami | Published: June 21, 2015 3:58 PM
AIRLINES

Tyler is likely to visit India soon when he may raise these issues with the Indian government. (PTI)

Poor aviation infrastructure and “difficulty” in doing business like high taxes and regulations have deterred foreign airlines from investing in Indian carriers, the chief of global airlines’ body IATA has said.

Tony Tyler, Director General and CEO of the International Air Transport Association (IATA), also termed the proposed system to replace the 5/20 rule, which allows Indian carriers to fly abroad only after five years of domestic operations and a 20-aircraft fleet, as “misguided” and said such rules “should not be there”.

Tyler, who spoke to Indian journalists here recently on the sidelines of the 71st annual general meeting of the IATA, is likely to visit India soon when he may raise these issues with the government.

Asked why there were very few takers among major foreign airlines like British Airways or Lufthansa after the Government allowed them to invest in Indian carriers, he said “you will have to check with the airlines for their reasons of not investing.”
“But if you ask me it is probably poor infrastructure, difficulty to do business and high costs. Why would British Airways want to spend a lot of money investing in India where there are high taxes and all that when (they can) go and buy (Irish flag carrier) Air Lingus in a country which favours aviation even when Air Lingus is competing against one of the most competitive airline in the world, Ryan Air, just across the road.”

On whether he saw a thrust on the aviation policy front after the BJP-led government took over, the IATA chief said “I think there are one or two things that they are doing and they are not altogether positive.”

“I think in the new system for (replacing) 5/20 rule they have got this system of domestic flying credits. This is well intentioned but misguided because it is so complicated. Monitoring and verifying is very complicated.”

Observing that airlines should fly routes “because it makes economic sense”, Tyler said, “if you are going to put in place a system where you need to fly to get credits then you are introducing a completely strenuous element into decision- making, route development and operations.

“It should not be there. It is just adding regulatory cost and burden to an industry that is already over regulated. It is pulling in the wrong direction.”

Regarding investments by foreign carriers in India, the IATA chief said an airline like the British Airways was investing “where they are because they see better returns can be made from buying a 79-year-old Irish airline than investing in a new airline. A 79-year-old Irish airline in a mature market is still a better proposition than going into one of the world’s biggest countries with a fast growing market.”

He was, however, happy that India’s aviation safety mechanism was restored the top-most Category-I status by the US regulator Federal Aviation Administration (FAA).

“The most significant (push) has been the emphasis on safety. I had in mind particularly the categorisation of the FAA from Category-II to Category-I. That has been very positive and good to see that India is now back where it should be,” Tyler said.
He, however, added that such a thrust was not visible in the infrastructure sector.

When asked about the Delhi airport being ranked number one by Airports Council International (ACI), Tyler said a lot more could be done on this count.

Making a comparison with China on aviation infrastructure front, the IATA DG said “China is not a rich country, it is getting richer partly because it is adopting a pro-aviation structure and aviation is helping make China rich.

“They have a big successful hub in Beijing and they are building others. India should be doing more.”

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