BWI: FICCI-KPMG Paper Lists 8-point Action Agenda to Make India a global Aviation Hub and 3rd Largest Aviation Market by 2020

Press release from Business Wire India
Source: Federation of Indian Chambers of Commerce and Industry
Thursday, March 15, 2012 02:50 PM IST (09:20 AM GMT)
Editors: General: Consumer interest, Economy, People, Politics, Travel & tourism; Business: Business services, Defence & security, Hospitality, Media & entertainment, Transport engineering, Travel & tourism
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FICCI-KPMG Paper Lists 8-point Action Agenda to Make India a global Aviation Hub and 3rd Largest Aviation Market by 2020


Hyderabad, Andhra Pradesh, India, Thursday, March 15, 2012 -- (Business Wire India) -- India's vision of becoming a global aviation hub and the third largest aviation market by 2020 can be achieved through an 8-point action agenda that pursues 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 Knowledge Paper on 'India: The Emerging Aviation Hub'.

The paper to be released at 'India Aviation 2012: International Conference on Civil Aviation' here on Wednesday calls for the following actions:

-- Ensure close collaboration between the Ministry of Civil Aviation, other related ministries (finance, home, defence, external affairs, commerce and industry, tourism, environment, HRD, etc.), regulators (DGCA and AERA) and the industry.
-- Assist nodal ministries to promote India as an industrial and tourism hub in order to derive synergistic benefits for the aviation industry. Leading aviation markets like UAE and Singapore have a robust industrial, trading, maritime and tourism infrastructure that both supports and benefits from their aviation sector.
-- Encourage state governments to reduce sales tax on 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.
-- Essential Air Services Fund (EASF) to support air connectivity to Tier 2/3. Develop investor friendly regulatory policies to encourage greater private sector investments in airports.
-- Implement recent policy decisions like 49 per cent FDI limit, direct import of ATF and opening of bilateral rights to support the airline sector. Establish safeguards to prevent excessive and predatory ticket pricing since both are anti-passenger.
-- Establish the 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.
-- Promote the domestic MRO industry by removing the anomalous tax structure and provide it a 'deemed export' status to help prevent the flight of business abroad.
-- Establish a world-class National Aviation University and promote private sector investments in training academies to produce high-skilled human resources

The paper notes that 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, India now stands at a crossroad wherein certain fundamental changes can help propel it from a leading aviation market to becoming a global aviation hub.

There are significant challenges to be overcome. 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 AAI and the private sector, there are significant challenges related to fixation of airport tariffs, land acquisition and various government approvals. Growth of other key areas like air cargo, maintenance, repair and overhaul (MRO), general aviation (GA) and human resource development have been constrained due to infrastructural limitations and lack of supportive policies.

Urgent remedial measures are required. India needs to be promoted as a trade and tourism hub in order to derive synergistic benefits for the aviation industry. Leading aviation hubs like USA, EU, UAE, Singapore, China etc have a robust industrial, trading, maritime and tourism ecosystem that both supports and benefits from their aviation sector. Close collaboration between the Ministry of Civil Aviation (MoCA), related ministries (finance, home, defence, external affairs, commerce and industry, tourism, environment, HRD etc), regulators (DGCA and AERA) and the industry is the need of the hour.

India would need to broaden the base of domestic flyers through greater air connectivity in Tier 2/3 cities. Establishment of the Essential Air Services Fund (EASF) and investor friendly policies are imperative. State governments have been persuaded for long regarding the need to reduce sales tax on inputs like ATF. A good option before the government is to add ATF to the list of declared goods with a uniform levy of 4 per cent across the country.

The recent policy decisions like 49 per cent FDI limit for global airlines, direct import of ATF and opening of bilateral rights are welcome and need to be implemented quickly. There is a need to establish safeguards to prevent excessive and predatory ticket pricing. Similar policy decisions are required to support cargo, MRO, general aviation and aviation education. India needs a world-class National Aviation University and private sector investments in training academies to produce high-skilled human resources.


CONTACT DETAILS
Mr. Abdul Salam, Deputy Director- Transport & Infrastructure, FICCI, +91 9999884007

KEYWORDS
CONSUMER, ECONOMY, PEOPLE, POLITICS, TOURISM, BUSINESS SERVICES, DEFENCE, HOSPITALITY, MEDIA, TRANSPORT, TRAVEL

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