Friday, 16 March 2012

India going to be a global aviation hub by 2020

India going to be a global aviation hub and the third largest aviation market in the world by 2020 if an eight-point action plan is pursued, a FICCI-KPMG Knowledge Paper says.

The paper, "India: The Emerging Aviation Hub", was released on the second day of India Aviation 2012 here Thursday. It called for pursuing policies conducive to the growth of the civil aviation sector and focussing squarely on quality, cost and passenger interest.

The paper called for ensuring close collaboration between the ministry of civil aviation and other ministries like finance, home, defence, external affairs, commerce and industry, tourism, environment, human resources and regulators, and the industry.

It suggested that India be promoted as an industrial and tourism hub in order to derive synergistic benefits for the aviation industry.

The state governments should be encouraged to reduce sales tax on aviation turbine fuel (ATF). "The long-term benefits in terms of higher economic activity and employment generation would more than compensate for the notional loss of tax revenue in the short run," it said.

The paper called for setting up an Essential Air Services Fund (EASF) to support air connectivity to tier-II and tier- III cities. It underlined the need for investor-friendly regulatory policies to encourage greater private sector investments in airports.

It urged the government to implement recent policy decisions like 49 per cent foreign direct investment, direct import of ATF and opening of bilateral rights to support the airline sector. the paper also suggested safeguards be put in place to prevent excessive and predatory ticket pricing since both are anti-passenger.

FICCI-KPMG mooted the idea of Air Cargo Promotion Board (ACPB) to address the significant challenges in the air cargo sector and make India an air cargo hub for the region.

It said the domestic maintenance repair and overhaul (MRO) industry should be promoted by removing the anomalous tax structure and provide it a 'deemed export' status to help prevent the flight of business abroad.

There is also a suggestion for establishing a world-class National Aviation University and for promoting private sector investments in training academies to produce high-skilled human resources

The paper noted that air-travel has still not percolated to the masses. Most of the Indian air carriers are posting cash losses due to volatile oil price, high fuel taxes, rupee devaluation, high interest rates and below-cost fares.

Though world class airports have been developed by the Airport Authority of India and the private sector, there are significant challenges related to fixation of airport tariffs, land acquisition and various government approvals.

While both passenger and cargo traffic have shown robust growth and there has been modernization and augmentation of capacities at various metro and non-metro airports, it said, India now stood at a crossroad wherein certain fundamental changes could help propel it from a leading aviation market to becoming a global aviation hub.

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