Airlines will have to spend 14% profits on DIAL charges: Tony Tyler

Interview with DG and CEO, International Air Transport Association

Tony Tyler, director general and chief executive officer of the International Air Transport Association (Iata), a global industry trade body, says the European Union-Emission Trading Scheme is a regional programme, which cannot be imposed on the rest of ther world. In an interaction with reporters in New Delhi, Tyler says Europeans should withdraw the “objectionable” elements in the scheme in consultation with the International Civil Aviation Organisation. Edited excerpts.

What is Iata’s stand on the EU-Emission Trading Scheme (ETS)?
Iata is not against the emission trading schemes. We believe ETS is a good example of market-based measures which would help the industry in meeting challenging environmental goals in terms of meeting our carbon emission targets. It would increase our efficiency by 1.5 per cent every year between now and 2020 from net freeze of carbon emissions to carbon neutral growth by 2020 and eventually to hit the target of 50 per cent reduction in emission by 2050. The problem with the EU-ETS is it is a regional scheme the Europeans are seeking to impose on the rest of the world. India is prominent among countries objecting to it. What Europeans believe is a stepping stone in the global system is a roadblock for the industry. They should recognise that and find a way of withdrawing the objectionable elements. They should come to the International Civil Aviation Organisation for this.

I don’t think India is philosophically against market- based measures. India is fair in its opposition.

What are your objections to the Airports Economic Regulatory Authority’s decision to raise airport charges by 346 per cent of the Delhi airport? The raise comes after 10 years.
I don’t agree that the rate increase is justifiable because it’s happening after 10 years. Why should there have been a rate increase earlier when the improved facilities just came up some time back? Nowhere in the world we have seen such a steep raise.

We are not happy with the huge increase in costs and introduction of charges on passengers as that dampens demand. As I mentioned, there is a projection of dampening of five-seven per cent demand. The Delhi airport enjoys 30 per cent of the commercial revenue coming into the aeronautical side of the business and the rest goes to the airport operators without any form of regulatory consideration.

If the airport can enjoy returns of 16 per cent on the aeronautical assets, we consider that to be fair. At the same time, the airlines have the right to enjoy the benefits of the business that they are bringing to the airport. Airlines (operating in New Delhi) will have to shell out around $ 400 million because of this raise. This amounts to about 14 per cent of their profitability worldwide.

Do you think the financial fragility of airlines in India is compromising safety?
I am sure that DGCA (aviation regulator Directorate General of Civil Aviation) is keeping a close eye on this and doing a good job. Safety is above everything else.

What has been the update on Kingfisher Airlines joining the domestic BSP (Billing and Settlement Plan, a system designed to facilitate the flow of data and funds between travel agencies and airlines)?
We are in dialogue with Kingfisher regarding this. Kingfisher would be reinstated in the domestic BSP after it signs the agreement. I can’t comment on the timeline.