New Delhi must learn that air travel is no luxury

For many middle-class Indians, more affordable air travel has been one of the most visible fruits of the recent years of economic modernisation.
Until a few years ago, long railway journeys were the dominant mode of domestic travel for all but the privileged few who could afford hefty fares on monopolistic state carriers.
But since then, new service-oriented private carriers have been making air travel more accessible, allowing millions more Indians to take to the skies. In 2007, Indian airlines carried 43m passengers on domestic flights, up from 16m in 2004, boosting India's domestic tourism and business alike.
Yet, India's government still views air travel as a luxury item - and a potential cash cow to help boost its own weak finances. Indian airlines must pay 60-70 per cent more than the world market prices for jet fuel, due to hefty taxes. The receipts are used partly to finance state subsidies on petroleum products for other users.
That appears unsustainable. Airlines are expected to post combined losses of $2bn this financial year, as passenger numbers decline because of higher fares.
In a bid to pare their losses, private carriers are sending back planes, slashing staff and cancelling expansion plans, while Jet and Kingfisher, the two biggest, have forged a cost-cutting operational alliance.
New Delhi must recognise that air travel is not a luxury item to be heavily taxed, but an integral part of the kind of modern, efficient economy that it aspires to be.
17/10/08 Paul Betts and Amy Kazmin/Financial Times, UK

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Categories: Indian Aviation- In General Oct 2008