Turbulent times ahead for Indian aviation sector, says IATA

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The Indian aviation industry may not do well this year in the absence of any major structural changes, apex body for the global airline industry IATA's director general Tony Tyler said here on Thursday.

"I don't see this year is going to be any easier for Indian carriers than last year. Fuel prices have risen. And there have not been any major structural changes in the industry which will help to offset that particular cost penalty," Tyler of International Air Transport Association (IATA) said in a press conference.

He said it was necessary to suspend Kingfisher Airlines from its clearing house to protect the system.

"The difficulties of Kingfisher are well known...We had to suspend Kingfisher from the travel agency clearing house. We think it is necessary to protect the whole system. It is the system we operate on behalf of hundreds of airlines. We are now discussing with Kingfisher the term on which we can reinstate the programs. The discussions are continuing," the IATA chief said.

IATA had to suspend Kingfisher after it failed to provide IATA with a cash deposit, required to continue its participation in the BSP and the CASS.

The required cash deposit was intended to ensure the airline is able to meet its financial obligations in the BSP and the CASS, an IATA spokesperson earlier said in a statement from Singapore.

Tyler also said that the high User Development Charges at airports in Delhi and Mumbai should be re-looked by the government in order to stop further damage to local and international airlines connectivity and foreign tourist arrivals.

"AERA proposed 340 per cent of increase in the UDF at Delhi airport. If it materialises, Delhi will become the most expansive airport. India's aviation industry is sick. Adding a USD 300 million headache to it will pull it in intensive care from a cost perspective," Tyler said.

He added that it is also estimated that a 5-7 per cent decrease in demand will result from the move. "It will come with a fall in tourist arrivals and further damage to local and international airline connectivity," the IATA chief said.

He added IATA is also concerned about the application of 10.3 per cent service tax on air tickets as well as to service that airlines purchase like landing and air navigation fees.