Ficci plan to boost India’s aviation

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India’s vision of becoming a global aviation hub and the third largest aviation market by 2020 can be achieved through an eight point action agenda. The agenda must pursue policies conducive to the growth of the civil aviation sector and keeps the focus squarely on quality, cost and passenger interest, according to a FICCI KPMG report.

The report, “India: The Emerging Aviation Hub,” was released on the second day of the India Aviation 2012 fair here on Thursday. It advocates “close collaboration” between the ministry of civil aviation and other ministries including, finance, home, defence, external affairs, commerce and industry and tourism, and also the industry regulators, the DGCA and AERA.

It suggested that the state should reduce sales tax on aviation turbine fuel. The long-term benefits in terms of higher economic activity and employment generation would compensate for the short-term loss of tax revenue.

The report urges the government to implement policy decisions like 49 percent foreign direct investment limit, direct import of ATF and opening of bilateral rights to support this sector.
The report also suggests creation of Essential Air Services Fund to facilitate air connectivity to Tier two and three cities.

In addition the government should establish safeguards to prevent excessive and predatory ticket pricing, since both are anti - passenger.

There should be an Essential Air Services Fund to support air connectivity to Tier two and three. It called for development of investor friendly regulatory policies to encourage greater private sector investments in airports.

The report urged the government to implement recent policy decisions such as the 49 percent FDI limit, direct import of ATF and opening of bilateral rights to support the airline sector. In addition the government should establish safeguards to prevent excessive and predatory ticket pricing, since both are anti - passenger.

Other suggestions include, establishment of an Air Cargo Promotion Board to address the significant challenges faced by the air cargo sector and make India an air cargo hub for the region, promotion of a domestic MRO industry by removing the anomalous tax structure, and setting up of a world - class National Aviation University.

The research paper notes that, while both passenger and cargo traffic, have shown a robust growth and there has been modernization and augmentation of capacities at various metro and non - metro airports, India now stands at a crossroads wherein certain fundamental changes can help propel it from a leading aviation market to becoming a global aviation hub.

Most of the Indian air carriers are posting cash losses due to volatile oil prices, high fuel taxes, rupee devaluation, and high interest rates and below - cost fares. Though world - class airports have been developed by the AAI and the private sector, significant challenges remain relating to fixation of airport tariffs, land acquisition and various government approvals.

India needs to broaden the base of domestic flyers through greater air connectivity in tier two and three cities.