Brussels, June
21:
The
Director-General of the International Air Transport Association (IATA), Mr Tony
Tyler, is coming to India next month to convince all the stakeholders of the
need to reduce airport charges. In an exclusive interview with Business Line
on the sidelines of the SITA IT Summit in Brussels, Mr Tyler explained why this
is important.
Excerpts from
the interview:
Has the
increase in charges put paid to Delhi airport’s chances of becoming a global
hub?
Delhi airport’s
prospects of becoming a hub are very poor. You cannot be a hub if you are a
very expensive airport. The study which the airport sent to IATA to show that
it is not a very expensive airport actually confirms that it is… their own
numbers show that it is the most expensive long-haul airport in the world. I do
not want to pick a fight with Delhi airport, but want to talk to all the
stakeholders which include airports, the Government, the Airports Economic
Regulatory Authority and the Ministry and see whether we can find a solution to
bring down costs for airlines.
How will you do
this?
One opportunity
seems to be that the Delhi airport operator has to give 46 per cent of all the
revenue that it collects to the Airports Authority of India (AAI). ]
Perhaps the
Government can somehow find a way of rebating some of the money to the airlines
or find some way of reducing that income stream to reduce the airlines’ cost of
operations.
You are not
talking about changing the contract? Is IATA now saying that the increase in
costs for airlines must be offset with some other costs?
That will be
one opportunity. I am going to India in July. This is really important to the
industry.
Increasing
costs 346 per cent is a problem, especially in India where, if you look at
purchasing power parity — that is a lot of money … it is an expensive place. We
need to find a solution.
Let us work
together to make it a win-win for everybody. Being a hub is a great ambition.
Geographically, it is well located, the facilities are excellent. It has all
the ingredients to make it a good hub; it is just that it is not
cost-competitive.
If the
Government can find a way of making it cost-competitive and perhaps foregoing a
bit of direct revenue, there are huge amounts of indirect benefits, in terms of
job creation, high quality and value add to many industries.
Are you in
favour of foreign direct investment in teh Indian aviation sector?
I am in favour
of liberalising access to capital everywhere. Almost every country I can think
of allows foreign investment in its airlines, although most countries have a
limit. In India it is zero, and that is clearly out of line with international
practice. Just allowing foreign direct investment will not make it happen
because any investor is going to ask: ‘where is my return for the risks on my
investment? Will the returns justify those risks?’
Frankly, the
Indian Government needs to adopt policies that will de-risk those investments
before it makes much of a difference — airport charges, taxation and fuel.
I am in favour of liberalising access to capital everywhere. Almost every
country I can think of allows foreign investment in its airlines, although most
countries have a limit. In India it is zero, and that is clearly out of line
with international practice. — Mr Tony Tyler, Director-General, IATA
