Tuesday, June 07, 2016

Auctioning unused Indian bilateral rights is a strange idea: Tony Tyler

Tony Tyler, the out-going Chief Executive Officer, International Air Transport Association (IATA), told select Indian media people that there was a lot that he did not like about the proposed civil aviation policy.

Edited excerpts from a media interaction.

You have been leading IATA for about 5 years, how much progress have you been able to make with the Indian Government in sensitising it to issues that affect international and Indian carriers?

It is always hard to tell how effective you have been in your advocacy efforts because they (Government) are making policy all the time. You cannot always say how much of what you have said has influenced them.

But there is still a lot that the Indian Government needs to do. We think that on airport charges the Government needs to let the Airports Economic Regulatory Authority do its work because at the moment legal challenges are getting in the way of AERA’s recommendation on reduction in charges at Delhi airport.

Our argument is that the GST regime should be rated at zero for international air transport services in line with OECD recommendations on sale of air tickets. The taxes on fuel are another problem.

We are still to see the civil aviation policy even though there is a lot we do not like about it.

Could you name what you do not like about the policy?

The 2 per cent Regional Connectivity Fund. This levy is going to increase the cost of air travel. It will dampen demand. It is against ICAO principles. We do not like the look of that.

We do not like the idea of auctioning unused Indian bilateral traffic rights to foreign carriers. This is something which does not happen anywhere in the world. It is a very strange idea and not one we would like to see happen. It undermines the whole principle of bilateral traffic rights exchange. If you want to change the system.. fine... change the system but auctioning is a very strange way to go ahead.

What is your recommendation to the Indian Government? Not look at auctions but look at something like an open sky or something?

If the Indian Government wants to see more air services they should negotiate different air services agreements. But auctioning of unutilised Indian bilateral rights which Indian carriers should be using to foreign carriers is a potential can of worms.

It will also distort the market in the sense that the dominant carrier will become even more powerful. It is not a formula for healthy competition.
07/06/16 Ashwini Phadnis/Business Line
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