The Indian aviation sector, the tenth largest in the world, is looking even more curious. About 70 million domestic tickets are estimated to be sold in 2014-15 and the Centre has an ambitious aim to enable 300 million domestic ticketing by 2022 and 500 million by 2027; similarly, international ticketing is expected to touch 200 million by 2027. In contrast, our neighbouring giant, China, added 100 million tickets in 2014 alone.
So, what is ailing the local aviation sector?
Transport systems (rail, road or waterways) require public investment and support to deliver competitive passenger fares and services. Howsoever efficient the carriers maybe, the enabling infrastructure needs state support to build and sustain.
India traditionally moves on rail, with nearly 8,400 million passengers clocking 1,158 billion passenger km in 2014--far more than China and Japan combined. The credit for this goes back to the colonial times when this sector had a separate Budget.
The absence of sustained and continuing government support for building infrastructure similar to Railway is the first challenge. Where will the money for this come from? Certainly not from overseas investors.
The industry grumbles that it is over-regulated, over-controlled and over-taxed. Notable are taxes levied on air turbine fuel (ATF). The fuel costs of Indian carriers account for 40 to 50 per cent of the total cost of the air carriers, compared with 20-30 per cent in other parts of world. This hurts competitiveness. The civil aviation policy, the ‘5/20 rule’, requires Indian carriers to fly for a minimum of five years and have a fleet of 20 aircraft before they can operate overseas routes. This raises another question — if neighbouring nations can encourage their entrepreneurs to create low-cost regional airlines such as Air Asia and Silk Air, why can’t India also help create such airlines?
17/01/16 Gokul Chaudhri/Business Line
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So, what is ailing the local aviation sector?
Transport systems (rail, road or waterways) require public investment and support to deliver competitive passenger fares and services. Howsoever efficient the carriers maybe, the enabling infrastructure needs state support to build and sustain.
India traditionally moves on rail, with nearly 8,400 million passengers clocking 1,158 billion passenger km in 2014--far more than China and Japan combined. The credit for this goes back to the colonial times when this sector had a separate Budget.
The absence of sustained and continuing government support for building infrastructure similar to Railway is the first challenge. Where will the money for this come from? Certainly not from overseas investors.
The industry grumbles that it is over-regulated, over-controlled and over-taxed. Notable are taxes levied on air turbine fuel (ATF). The fuel costs of Indian carriers account for 40 to 50 per cent of the total cost of the air carriers, compared with 20-30 per cent in other parts of world. This hurts competitiveness. The civil aviation policy, the ‘5/20 rule’, requires Indian carriers to fly for a minimum of five years and have a fleet of 20 aircraft before they can operate overseas routes. This raises another question — if neighbouring nations can encourage their entrepreneurs to create low-cost regional airlines such as Air Asia and Silk Air, why can’t India also help create such airlines?
17/01/16 Gokul Chaudhri/Business Line
