Govt needs to step up reforms to cut aviation losses: IATA
25 Sep 2008
New Delhi: Saying that airlines would post a cumulative loss of $1.5 billion, second only to the US this year, the IATA has asked the government to "wake up" to the crisis plaguing India's aviation sector and ensure speedy action for reforms, including reduced taxes.
Director General and CEO of International Air Transport Association (IATA) Giovanni Bisignani said that the situation of India's aviation sector is volatile, and with growth at just 1.9 per cent this July, compared to the solid 7.3 per cent last year, the industry would post a loss of $1.5 billion this year.
Bisignani asked the government to acknowledge the crisis and take remedial steps to remove the excise duty, and cut sales tax to four per cent on the Aviation Turbine Fuel (ATF) which for some airlines accounts for almost 50 per cent of their operational cost.
He said that this crisis is a wake up call for India's finance ministry, and that the sector is crucial for the entire economy. He also said that domestic capacity growth would grind to a halt by the end of this year, as the orders for new aircraft had been deferred by a number of Indian carriers, and also because there has been some consolidation in the aviation sector.
"A very wise decision taken too late does not make any sense,'' Bisignani quipped.
Bisignani said that the though the government's has established a high level committee to discuss the problems being faced by the Indian aviation industry, his immediate concern was "speed", adding that India's decision making process is slow, and that the ''situation does not wait for the recommendation of committee because aviation is a fast growing industry".
