Mittu Chandilya, chief executive of AirAsia India, has criticised the country's stringent regulatory environment for airlines.
According to a report in The New York Times (NYT), Chandilya said, “I believe in free markets and open skies, but if you look at the policies we have in place, I don’t think we have that at all.”
In India, every airline, even those with just a few planes, is required to fly regularly to remote regions, where flights often run half-full. New players like AirAsia India are prohibited from flying lucrative international routes until they are five years old and have at least 20 aircraft, the so-called 5/20 rule.
Chandilya has been vigorously moving state governments to reduce the tax on aviation turbine fuel (ATF), given that each state controls its own taxes on ATF. Many states have kept the figure as high as 30 percent, the report said, adding more than half of AirAsia India’s operating costs are fuel-related.
Moreover, high taxes also compel Indian airlines to send their aircraft to nearby countries for maintenance. AirAsia is likely to take Malaysia and Singapore’s help in the matter.
“I talk to ministers and policy-makers about how they can help the industry and promote growth, but it is very difficult to get them to understand that reducing these taxes will probably boost their states’ economies,” NYT quoted Chandilya as saying. “The ministries aren’t coordinating with each other — they only have their own interests in mind.”
Even as the ministry of civil aviation has put forward a proposal to ease the 5/20 rule, under which new airlines would now be able to garner “domestic flight credits” by flying to under-served regions and then use the credits for international flights, Chandilya says it would still take his airline at least three years and 15 aircraft to garner enough credits.