Assocham proposes airport development fund

The Associated Chamber of Commerce and Industry (Assocham) has proposed creation of an Airport Infrastructure Development Fund and Essential Airlines Services Fund, extending of infrastructure status to aviation industry, rationalisation of taxes on ATF, MRO and establishment of a National Aviation University to make the industry world-class.

The chamber, in a note to the government said, India is the ninth largest civil aviation market and passenger traffic has grown from 46 million during FY02 to 162 million in FY12 and cargo from 0.92 million tonnes to 2.28 million tonnes during the same period, giving a CAGR of 13 per cent and 10 per cent respectively.

While five Indian carriers operate international flights, it has added 280 aircraft during this period to reach 410; the aircraft fleet market size is estimated around $9 billion. The Private sector has had a major share in this growth with four international airport projects that got investments of over $6 billion.

The expectation is, in the next five years India would need another 1,000 aircraft of various types by FY17. Some 35 non-metro airports would be upgraded and five non-metro airports modernised.

Listing the “significant potential” for the country’s aviation industry, the study points to the opportunities in infrastructure development for wider business, more passenger benefits and economic growth of the country through expansion of civil aviation. It underlines that of the estimated investment of Rs 67,500 crore during the 12th Plan in the sector, as much as Rs 50,000 crore would come from the private sector.

Pointing out that the market share of low cost carriers has risen from 29 per cent in FY06 to about 70 per cent, the study says “this highlights the need to bring down the cost of air travel” and “to make it a more affordable and visible mode of transport”.

With regard to the low cost airports, the chamber says, “there is a need for airports which will complement the no-frills model offered by LCCs. There is great scope for a new dimension for the India civil aviation in connecting to tier II and tier III cities. This should be seen in the context of the rapid urbanisation of the country and the emergence of several smaller towns as industry and business centres.”

http://www.business-standard.com/india/news/assocham-proposes-airport-development-fund/488657/