IATA opposes greenfield airport tariff model, demands low tax on jet fuel

The International Air Transport Association has opposed the government proposal of a pre-determined tariff for greenfield airports while reiterating it's demand for lower taxes on jet fuel and the abolition of GST on international tickets.

Alexandre de Juniac, director general of IATA on Tuesday said that it makes no sense to fix a passenger yield at the outset of concession contract that will run for four decades. "Flexible parameters should be set that are regularly reviewed by a regulator. We know from bitter experiences in Brazil, Australia and elsewhere that selecting the company that simply proposes the highest concession fee does not yield good long term results," he said.

De Juniac raised the concern at an aviation summit in Delhi to celebrate 48 consecutive months of double digit air traffic growth in India.

Civil aviation minister Suresh Prabhu said 100 new airports will be built in next 10-15 years with an investment of $60 billion.

Last month the civil aviation ministry released draft greenfield airport policy. Bidding model under the policy has been changed from revenue share basis to fixed fee per passenger and government hopes this would make flying more affordable.

Currently, the airport tariff is calculated on the basis of project capital expenditure, cost of capital and passenger traffic. The tariff is revised periodically and passenger fees increase or decrease based on capital expenditure.

De Juniac also raised concern about high taxes on jet fuel and lack of transparency in its pricing and called upon the government to do away with GST on international tickets as it violates international norms.

"Fuel accounts 24.2 per cent of an average airline's cost structure. In India, it is 34 per cent making Indian carriers particularly sensitive in this area. All airlines are already suffering from the rise in fuel prices and India's regulatory and tax framework around fuel hits airlines serving this market even harder," he said.

Among other things,  IATA has demanded reduction in excise duty on fuel, common-use open access infrastructure and removal fuel through put fee. "The lack of competition in fuel and lack of true open access to on-airport fuel infrastructure is strangling lifeblood from airlines," De Juniac remarked.

Flight from Navi Mumbai in 3 yrs

Civil Aviation Secretary R N Choubey said the first flight from Navi Mumbai airport was expected in three years. Choubey reviewed the airport construction last week. “Nobody expects Navi Mumbai to be open in 2019 as planned. But the authorities must do all in their power to eliminate further delays,” IATA director general Alexandre de Juniac said. 

Takeaways

• First flight from Navi Mumbai in three years
• Civil aviation secretary R N Choubey today said the first flight from Navi Mumbai airport is expected three years. 
• Choubey reviewed the airport construction work last week and the three year deadline is based on assessment of state government and GVK group which is developing the project.
• "Nobody expects Navi Mumbai to be open in 2019 as planned. But the authorities must do all in their power to eliminate further delays," De Juniac said in his address.