FICCI-KPMG study says all-round development needed at airports

Despite sagging growth rates in recent years, India could be the largest aviation market by 2030, and the third-largest in six years flat or 2020, says a joint study by industry body FICCI and consultants KPMG.

However, such growth needs to be preceded by all-round improvements at airports, including those in air navigation, cargo, maintenance, repair and operations, as well as human resource development. The report, India Aviation, was released at the India Aviation 2014 show on Thursday.

Civil aviation in the country had expanded due to factors like the entry of low-cost carriers, modern airports, foreign direct investment in domestic airlines, cutting-edge information technology and increasing importance of regional connectivity. In terms of market size, the industry was already among the top 10 in the world with a size of US$ 16 billion, and experts claim it is just a fraction of what can actually be achieved.

The next wave of growth, the report said, would come through regional airports, pointing out towards the presence of about 450 used/unused and also abandoned airports/airstrips across the country.

States have begun to take proactive measures to promote air connectivity like reducing sales tax on Aviation Turbine Fuel (ATF), development of no-frills airport, promotion of aviation academies and supportive policies for airlines and tourism, said Amber Dubey, KPMG’s partner & head (Aerospace and Defence).

The study has called for relaxing regulations, revising security arrangements, allowing domestic-code sharing and providing free or discounted utilities. Connecting infrastructure too is pertinent since the next big growth is expected to happen in tier-two and tier-three cities.

In what could have a multiplier effect on economic growth, tourism and employment, the report has called for the immediate setting up of the proposed Essential Air Services Fund (EASF) by the Ministry of Civil Aviation (MoCA). Immediate attention was required on rationalising Central and State taxes on ATF and MRO, service tax on air tickets, high airport fee, etc.

An inter-ministerial task force on MRO needs to be formed immediately by the government to check the outflow of revenue, foreign exchange and jobs, as only 15 per cent of the work is done in the country, the paper said.

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