Warning that some Indian airlines could fold up if structural changes were not carried out immediately, the IATA has asked the government to take speedy steps to enable the industry weather the "perfect storm" of high costs and falling demand.
"India is among the most expensive places on the planet to buy aviation turbine fuel from. In August, it was 58 per cent more expensive to buy fuel in Mumbai for domestic flights than in Singapore," International Air Transport Association Managing Director and CEO Giovanni Bisignani told PTI.
Observing that the Indian aviation industry was passing through a 'fragile and delicate moment', he said some airlines could go bust in the coming few months if 'structural changes are not carried out expeditiously'.
As many as 25 carriers worldwide have folded up operations in the past several months due to huge losses, the latest being Italian national carrier Alitalia, leading to over 100,000 jobs in the aviation sector being lost.
He projected a cumulative loss of $1.5 billion for Indian carriers this year, second largest after that in the US, and warned that the 'dream of liberalisation can turn into a nightmare' if speedy action was not taken to counter 'the perfect storm of burgeoning costs and falling demand'.
The IATA chief identified three priority areas in which urgent action was required. These are -- reducing costs, improving infrastructure and adopting global standards on safety, security and other issues.
Observing that privatisation in civil aviation has not yielded positive results worldwide, he asked the government not to project the country's emerging aviation sector 'only as a market' but take the lead through innovative initiatives.
"I can go on giving examples of places where privatisation has failed. Privatisation around the world has not worked. I can give you examples from Australia to many other places . . . Don't repeat the mistakes or the phantom experience of the UK," Bisignani said.
Taking note of charges levied on overflights and for landing at Indian airports, he said these 'breach India's international obligations under the Chicago Convention.'
The service tax charged by the government on premium class tickets for international travel from India ran 'contrary' to the International Civil Aviation Organisation resolution 8632 calling for reduction in taxes.
"These are embarrassments for a country that is a long-standing member on the ICAO Council," Bisignani said.
Recommending urgent investments to create aviation infrastructure, he referred to the Mumbai airport and said, while there was no possibility of creating a third runway there, the greenfield airport under construction at Navi Mumbai can cater to only ten million passengers instead of a 100 million handling capacity that was required there.
"Mumbai needs an airport that can adequately serve the financial capital of the world's second-most populous nation. That means thinking much bigger and planning for capacity in the 100 million passenger range like Delhi, Seoul, Hong Kong and Dubai," he said.
Welcoming the setting up of a high-level committee to study the problems of the industry, he said he was "concerned about speed" in decision-making.
"In India, decision making process is slow . . . a very wise decision taken too late does not make any sense," he said.
Bisignani also sought passage of the legislation to establish the Airports Economic Regulatory Authority but wanted the body to have 'adequate teeth' to regulate airport charges and set standards on other issues.
He pointed out that the growth in the sector had slowed from 33 per cent in 2007 to only 7.5 per cent in the first half of this year and 'went negative in the last two months.'
On infrastructure costs, the IATA chief said India 'does not measure up and there is no transparency in the cost base for either airport or air traffic control.'
Regarding security issues, he said India had taken 'a major diversion in security' by not agreeing to non-standard data transmission for Advance Passenger Information.
"This is a serious flaw for India's API at a time when increased cooperation is needed," he said, adding that global standards have played a crucial role in development of air transport and 'should be at the heart of India's aviation policy and commercial development'.
Describing himself as 'an India-optimist', Bisignani said while Civil Aviation Minister Praful Patel has done 'a great job' in liberalising the aviation industry and setting the wheels of growth in motion, 'it is the responsibility of the government as a whole now to follow up and address the issues of the prevailing crisis with quick decisions based on global standards.'