Poor infra, high taxes deter foreign airlines from investing: IATA

IATA also termed the proposed system to replace the 5/20 rule as "misguided" and said such rules "should not be there"

Poor aviation infrastructure and "difficulty" in doing business like high taxes and regulations have deterred foreign airlines from investing in Indian carriers, the chief of global airlines’ body IATA said.

Tony Tyler, director general and chief executive of the International Air Transport Association, termed the proposed system to replace the 5/20 rule, which allows Indian carriers to fly abroad only after five years of domestic operations and a 20-aircraft fleet, as "misguided" and said such rules "should not be there".

Tyler, who spoke to Indian journalists here recently on the sidelines of the 71st annual general meeting of the IATA, is likely to visit India soon when he may raise these issues with the government.

Asked why there were very few takers among major foreign airlines like British Airways or Lufthansa after the Government allowed them to invest in Indian carriers, he said "you will have to check with the airlines for their reasons of not investing."

"But if you ask me it is probably poor infrastructure, difficulty to do business and high costs. Why would British Airways want to spend a lot of money investing in India where there are high taxes and all that when (they can) go and buy (Irish flag carrier) Air Lingus in a country which favours aviation even when Air Lingus is competing against one of the most competitive airline in the world, Ryan Air, just across the road."

On whether he saw a thrust on the aviation policy after the BJP-led government took over, he said, "I think there are one or two things that they are doing and they are not altogether positive."

"I think in the new system for (replacing) 5/20 rule they have got this system of domestic flying credits. This is well intentioned but misguided because it is so complicated. Monitoring and verifying is very complicated."

Observing that airlines should fly routes "because it makes economic sense", Tyler said, "If you are going to put in place a system where you need to fly to get credits then you are introducing a completely strenuous element into decision- making, route development and operations."

"It should not be there. It is just adding regulatory cost and burden to an industry that is already over regulated. It is pulling in the wrong direction."