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Less tax, better airports needed in India

By Hpanchal on July 25, 2012

The first steps to a vibrant aviation industry in India are coordinated public policies, according to Tony Tyler, director general of the International Air Transport Association. In a keynote address to the Confederation of Indian Industry, he said stakeholders must also address the high costs levied at airlines operating in India and the country's sub-par infrastructure.

High airport charges and fuel charges need to be brought down, he explained. A recent tax passed at Delhi Airport has been reported to add $400 million to operating costs for airlines routing through Delhi.

“The high cost of doing aviation business in India is squeezing the lifeblood out of the airline sector," Tyler said. "India’s airports are becoming increasingly expensive."

Taxation is another cost issue. The Indian government, Tyler said, imposes a tax on passenger tickets, but more important to cargo movement is the government's tax on landing, navigation and fuel. According to IATA, the fuel tax plus excise duty can account for 45 percent of total costs for carriers.

Finally, Tyler called for an infrastructure upgrade by making a airline capacity in Mumbai a priority. This, he said, likely means a new airport must be built.

"A new airport is needed in Mumbai or economic opportunities will be lost," he said. "I am pleased to see that Prime Minister Manmohan Singh has recognized the urgency of the situation and thrown his weight behind moving the Navi Mumbai airport project forward on a fast track."

All of these ideas were wrapped up in the speech into an "India Inc." approach to aviation. "It’s time for a grand plan to build India’s aviation future," he said, "and thereby strengthen the Indian economy."

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