IATA calls on India to address infrastructure constraints, policies

IATA has called on the government of India to maximise the potential contribution of aviation to India’s development by addressing infrastructure constraints and government policies that impose excessive costs on aviation.

Growth forecasts for India indicate a trebling of passenger demand by 2037 when some 500 million people are expected to fly to, from or within India. Already, aviation supports 7.5 million Indian jobs and Rs30 billion (US$419 million) of GDP (1.5 per cent of the economy).

Returning Indian travellers at Indira Gandhi International Airport

The financial struggles of India’s airline industry put the stable development of connectivity at risk, IATA stated, further pointing out that India’s carriers are suffering a “double-whammy” of steeply rising fuel costs and the decline in the value of the Indian rupee.

The rise in fuel costs is particularly acute for Indian carriers for which fuel makes up 34 per cent of operating costs — well above the global average of 24 per cent.

“While it is easy to find Indian passengers who want to fly, it’s very difficult for airlines to make money in this market. India’s social and economic development needs airlines to be able to profitably accommodate growing demand. We must address infrastructure constraints that limit growth and government policies that deviate from global standards and drive up the cost of connectivity,” said Alexandre de Juniac, IATA’s director general and CEO.

De Juniac’s remarks came during the opening address at the International Aviation Summit in Delhi, co-hosted by the Indian Ministry of Civil Aviation, the Airports Authority India and IATA to commemorate the approaching milestone of 50 running months of double-digit domestic growth for Indian aviation.

He called for work to develop a comprehensive and strategic masterplan for India’s airports, to open Navi Mumbai as quickly as possible as “urgent relief is needed for Mumbai’s severe capacity bottleneck”.

IATA also encouraged the Indian government to support the broad implementation of its One ID initiative, which uses biometric identification (similar to India’s Aadhar identity card) to save time by eliminating the need for repeated document checks in airports.

Another recommendation is for India to use military airspace to expand airspace capacity for civil operations, with IATA citing the success of a conditional airway opening through restricted airspace over Bhuj.

IATA also expressed its concerns on government proposals for concession contracts at newly developed greenfield airports. “Flexible parameters should be set that are regularly reviewed by a regulator. And we know from bitter experiences in Brazil, Australia and elsewhere that selecting the company that simply proposes the highest concession fee does not yield good long-term results,” said de Juniac.

In addition, the association encouraged the government to look at ways to improve India’s competitiveness such as by zero-rating GST for international travel in line with ICAO principles and international obligations.

And to create a more competitive market for jet fuel, IATA suggests that India adds domestic uplift to the GST framework with full input tax credit allowed, removes fuel throughput fees in line with global best practice, increases competition with common-use open-access infrastructure, among other means.

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