Piloting the aviation sector

What should the Government's role be in the aviation sector? Should it be extending a helping hand to an individual airline when it is in distress, or should it be creating an environment which will help all the players in the sector to not only survive but also thrive?
These are some of the questions being asked, given the current state of the industry, and the attempts being made by the Government to bail out the state-owned Air India (AI). Earlier, there were also rumours that the promoter of Kingfisher Airline, Mr Vijay Mallya had approached the Government for help.
There can be little doubt that the Government's role has to extend much beyond helping out a single airline in financial trouble. One of the most significant aspects of the Government's role is reducing input costs, most of which it controls. Take, for instance, the sales tax on aviation turbine fuel (ATF). This varies from 4 per cent to more than 26 per cent in different states throughout the country. Given that domestic ATF prices are almost 50 per cent higher than what an airline pays in, say, Singapore or Dubai, any decrease in its prices in India will hugely benefit the industry.
The Government should also focus on some other equally significant aspects which impact the industry as a whole. These include better air traffic flow management, and taking steps to decrease the holding time for an aircraft in an airport, so as to decrease flying time, thereby reducing consumption of ATF by home carriers. These are much-needed aspects that the Government should concentrate on, as these high-input costs are having a negative impact on the industry.
At a more micro level, the Government also has to step in, to ensure that predatory or irrational pricing mechanisms aren't followed by some airlines, so as to ensure that there is a level playing field for all. In this connection, FIA has also called for establishing a regulatory mechanism that would prevent malpractices like predatory pricing.
24/11/11 Business Line/Ashwini Phadnis

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Categories: Indian Aviation- In General Nov 2011