Indian Carrier CEOs Meet With Minister Raju
Monday, 22nd September 2014 at 04:45am
The Indian commercial aviation industry has long been plagued by various issues that prevent it from gaining a suitable ground to fast track its progress.
Major issues such as high operational costs, jet fuel costs and the decades-old 5/20 rule are the topics airline executives discussed with the Minister Raju during their meeting.
The meeting with the Civil Aviation Minister, Pusapati Ashok Gajapathi Raju, was the first for top airline executives since he assumed office on May 26 under the new administration. Top executives of seven existing airlines such as Air India, AirAsia India, GoAir, IndiGo, Jet Airways, SpiceJet, and Vistara had an audience with the Minister.
Foremost in the meeting's agenda was the sky-high cost of jet fuel used by Indian planes which is primarily due to high taxes imposed by the government on imported fuel.
The jet fuel is said to account nearly half the cost of an airline's operating expenses. India is said to be among the countries with high taxes levied on imported ATF (aviation turbine fuel). The government levies between 4-25% on ATF sales which makes jet fuel too costly in the country. Airline operators have long convinced the government to bring down the high tax to enable them to sustain their operations in the long-term.
Another issue that the airlines highlighted during the meeting is the high airport fees, most especially in the country's major gateways like Mumbai and Delhi which are both operated by private companies. This particular issue might prove to be tough to address for the new Minister as private-run airports are beyond his mandate, but by Airport Economic Regulatory Authority.
The decades-old 5/20 rule is another issue that operators, especially the new ones, discussed with the Minister. Under the rule, no operators shall offer international flights unless they operate at least 5 years within India and keep a fleet of no less than 20 aircraft. This particular issue seems to have a much better chance of getting addressed as the Minister had already hinted earlier that he's not in favor with it.
By: Pete Lee.