International Air Transport Association (IATA) Director General and CEO Tony Tyler today said it was needed a coordinated effort among all Ministries – at National and state levels to restore competitiveness in Indian aviation.
While suggesting a four pillar agenda (Taxes, Infrastructure, Costs and Investments Polices) to build competitiveness in Indian Aviation at the 3rd International India Aviation 2012 here, Mr tyler opined that removing the service tax to air tickets as well as to services that airlines purchase, such as landing and air navigation fees, would improve competitiveness of Indian aviation, boost access to both domestic and international connectivity and drive economic growth.
Even more damaging , however, is the tax on fuel, all fuel is subject to an 8.24 per cent excise duty causing domestic flights facing fuel taxes of up to 30 per cent and as a result, destroying the competitiveness of Indian airlines, He said. Globally fuel accounts for about 32 per cent of an airline’s cost base and for Indian carriers it is 45 per cent Ministry of Civil Aviation (MOCA) has understood this and is lobbying to reduce the burden, he said.
MOCA is seeking to address the issue of high jet fuel prices by allowing airlines to directly import fuel, so that the impact has been limited, he said the high cost of jet fuel has been hijacking the competitiveness of the Indian air transport industry for over a decade – with every flight thast has taken off or landed on the sub-continent, he pointed out. Appreciating the effort to start to address the issue, it is now clearly recognised by all that fuel taxes are sucking the life blood from the Indian aviation sector, he said.
The industry is now in crisis and we need a coordinated effort among all Ministries – at National and state levels -to restore competitiveness, he stressed. Taxes-particularly state taxes should be removed and a national access regime must be established for jet fuel and such a regime should allow users, including airlines, access to critical fuel infrastructure at reasonable prices, he added.