Levy on airlines can disrupt competitive conditions: IATA

Geneva: Describing India as among the "most open" aviation markets, international airlines grouping IATA's chief Alexandre de Juniac has said the country stands to benefit from the regional air connectivity plan but imposing levy on carriers can disrupt competitive conditions.

While being appreciative of the Indian government putting in a "consistent plan" for the aviation sector, Juniac also emphasised the need to have the right infrastructure and lower costs for the airlines.

"In general, we are not favouring levies because we think that it is a disruption or disturbance in the competitive conditions," Juniac told PTI in an interview here.

His comments come against the backdrop of the government levying up to Rs 8,500 per flight on major routes from December 1 in order to fund its ambitious regional connectivity scheme.

The scheme -- UDAN (Ude Desh ka Aam Naagrik) -- seeks to connect small cities by air as well as make flying more affordable for the masses.

"Regional connectivity is good for air traffic but using levy, tax or cross subsidy system, let's name it as it is, is not convincing," he said, adding that it is being opposed by many operators as something which would not be efficient.

"We think that if you want to develop regional connectivity, first of all we need to have right infrastructure, airports and the lowest costs. So, for us there is a very clear link between the level of cost and the dynamism of aviation, the flow of passengers," Juniac said.

To provide viability gap funding for the flights operated under UDAN, a levy would be imposed on every departure on major air routes such as New Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata. Under the scheme, fares for one-hour flights would be capped at Rs 2,500.

Juniac took over as the Director General and CEO of the International Air Transport Association (IATA) in September this year and has already visited India in his new role. The grouping represents more than 265 airlines from across the world. 

India has come out with the national civil aviation policy that aims to provide a fillip to the domestic sector, where passenger traffic growth has been more than 20 per cent for nearly two years.

"First of all, they (Indian government) have put together a consistent plan. You can agree to it or part of it, it is something that has to be underlined significantly... Regional connectivity is another part of the plan but we think that in terms of infrastructure and development, the Indian plan is positive and will have positive effect on aviation," the IATA chief noted.

When asked about how he sees the Indian aviation sector, Juniac said it would be "along with the most open but then there is a plan and then you have the execution or implementation of the plan" even as he struck a note of caution about implementation of the plans.

"Of course we will judge the plan as it is designed but we will also assess the way Indian government is going to implement it practically. We know that the devil is in the details and execution," he said.

India is the fastest growing domestic aviation market but in terms of consumer rights, the regulations are tough and difficult for airlines, he said, adding that it is the government's role to find the right balance.

"In terms of consumer rights, Indian regulations are tough, it is difficult for airlines and many airlines complain. But you know it is not only an Indian disease, that is there in many areas of the world. The role of the government is to find the right balance between the rights of passengers and the sustainability of the airline business," Juniac said.

Among others, he flagged concerns about high taxes on aviation fuel saying it was really a big problem and an enormous burden on the airlines.