The Hindu : Business : IATA chief calls for quick action to help crisis-ridden Indian carriers

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IATA chief calls for quick action to help crisis-ridden Indian carriers

Special Correspondent

Identifies three priority areas
Domestic airlines likely to post $1.5 billion losses

— Photo: Shanker Chakravarty

KEY DRIVER: Giovanni Bisignani, Director General and CEO, IATA, presenting a memento to Ankur Bhatia (left), Past Chairman CII DSC, at a CII session in New Delhi on Wednesday. Wolfgang Prock Schauer (right), CEO, Jet Airways, looks on.

NEW DELHI: Indian carriers have been hit hard from the global crisis arising out of high jet fuel prices and declining traffic and the airlines could post losses to the tune of $1.5 billion, Giovanni Bisignani, Director-General of the International Air Transport Association (IATA), cautioned on Wednesday.

The IATA chief said that growth of the civil aviation sector in India had slowed to 7.5 per cent in the first six months of 2008 from 33 per cent in 2007 and the last two months had also seen negative growth. He called for urgent action to help Indian carriers weather the storm of high costs and falling demand.

Mr. Bisignani identified three priority areas — reducing costs, improving infrastructure, and adopting global standards — in his address to the Confederation of Indian Industry (CII).

He said India was among the most expensive places to buy aviation turbine fuel (ATF). Last month, it was 58 per cent more expensive to buy fuel in Mumbai for domestic flights than in Singapore. Excise duties, throughput fees and State taxes of up to 30 per cent for domestic flights resulted in a cost structure that cannot support a competitive industry, he said.

Transparency

Mr. Bisignani favoured removal of excise tax, implementing a standard four per cent State tax for domestic fuel and greater transparency in overall pricing as some of the urgent measures to help the carriers tide over the present crisis. Demanding greater transparency in India’s airport and air traffic control costs, he said there was an estimated 20 per cent over collection for air traffic control while international operations were charged 33 per cent more than domestic flights to land at India’s airports.

On infrastructure, he said that while Delhi was moving towards the capability of handling 100 million passengers, the situation in Mumbai continued to remain critical. He said Mumbai needed an airport that can adequately serve the financial capital of India.

In his view, India had taken a major diversion in security and the non-standard data transmission requirement for Advance Passenger Information (API) was an added cost burden that provides no additional benefit. “This is a serious flaw for India’s API at a time when increased cooperation is needed,” he said.

He also called on India to take a leadership role in shaping aviation policies, including environment and commercial freedoms. “In a few years, Asia Pacific will be the largest single aviation market. India is a key driver of that growth and its enormous size makes it an important market,” Mr. Bisignani said.

Sounding optimistic on the Indian civil aviation industry, the IATA chief said the present crisis was highlighting that India’s decision making was too slow.

Meanwhile, Air India has chalked out a major initiative to increase its operational efficiency to overcome the ‘`alarming situation” arising out of high jet fuel prices over the past recent months.

Air India’s initiative

Air India had recently invited IATA’s ‘green team’ to undertake a fuel efficiency gap analysis of the airline’s operations, related to emissions reduction and fuel efficiency, where it was predicted to have potential to save $198 million annually for the airline, if certain changes were introduced.

Air India Managing Director Raghu Menon has, based on the recommendations of the IATA, constituted a steering committee to look into all matters of operational efficiency, fuel management and cost reduction.

Sub-committees have also been formed to ensure implementation of all projects determined by the steering committee and help in introduction of new processes and procedures, an AI release said.

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