Approach to Realize India's Aviation Potential
During his first visit to India as IATA’s Director General and CEO, Alexandre de Juniac called for a renewed look at the results of India’s public-private partnership in airport privatization, a reduction in taxation and for India to join international efforts on sustainability for air transport.
De Juniac congratulated India on its National Civil Aviation Policy, which had positive some encouraging elements, such as developments on open skies, code-sharing, and foreign direct investment. However, he noted that there are still areas of concern, such as the mandating of hybrid till for the regulation of airport charges and the levy to cross subsidize regional flights.
De Juniac expressed his concerns about the impact of airport privatization in India. “IATA does not support the privatization of airports. Nor are we officially opposed to it. But looking at the experience of airport privatization – in India and elsewhere – I am hard pressed to find an example where the results, overall, have been positive. A private sector mindset can add value to airport projects with efficiency, cost effectiveness, entrepreneurial spirit, and so on. But we need a stronger regulatory framework than exists today to ensure that there is a balance struck between commercial and national interests,” said de Juniac. Airlines operating in India have faced massive costs increases. And the Airport Economic Regulatory Authority (AERA) has not been able to implement its own tariff orders, including reducing Delhi’s charges by 96%. “There is no turning back the public-private partnership in Indian airports. But what can be done is to strengthen the regulatory structure for the airports already privatized in order to defend the public interest,” said de Juniac.
De Juniac also called on the Indian government to address the concerns of airlines on the Goods and Services Tax (GST), which will be implemented in April 2017. “The GST regime needs to adhere to international standards and principles. We have called for a zero-rating for international flights when the GST comes into effect next April. This seems unlikely. To limit its damage to the sector’s competitiveness, we would at least hope for an abatement in the rate,” said de Juniac.
De Juniac also expressed his disappointment that India is not among the initial 65 states participating in the Carbon Offset and Reduction Scheme for International Aviation (CORSIA)
agreed by governments at the International Civil Aviation Organization 39th Assembly. “As India had ratified the Paris Agreement in the same week, we were hopeful that the spirit of climate leadership would extend to aviation emissions. We continue to urge the Indian government to come on board with CORSIA and join the voluntary period,” said de Juniac.
India’s air transport sector has supported 8 million jobs and contributed to $72 billion in GDP. IATA’s recent 20-year air passenger forecast estimated that India will overtake the UK to become the third largest market with 278 million passengers in 2025. By 2035, India is expected to be a market of 442 million passengers, with the aviation industry supporting 19.1 million jobs and contributing to $172 billion in GDP, according to the IATA-commissioned Value of Aviation study.