SIGNS are pointing to a revival of India’s aviation sector this year thanks to Air India’s recovery, a flood of new seat entitlements and measures that will tackle the hot-button issue of high aviation turbine fuel (ATF) sales taxes.
Revealing this at Routes Asia, civil aviation minister Ajit Singh said recent discussions with Maharashtra state representatives would see changes on the ATF front that will be announced tomorrow.
Maharashtra’s Mumbai airport is a key gateway to India, but has one of the highest ATF sales taxes in India, at about 25 per cent. One of the primary issues facing carriers in India is the inconsistent tax rates across the country.
He also said that Mumbai had the potential to serve as a hub, but this would work only when tier two and tier three cities were connected and plans were in place to “incentivise” rather than “mandate” carriers to fly to smaller cities.
Singh also pointed out that enhanced traffic rights for Indian carriers had granted an additional 81,000 overseas seat entitlements, with clearance to come into effect for summer and winter 2013.
Air India’s fortunes are on the rise too, beginning the current 2013/2014 Indian financial year with a positive balance of Rs200 million (US$3.7 million) EBIDTA, the first time since 2007. This is welcome relief after it started the previous financial year with negative Rs20 billion.
The airline’s market share grew to 20 per cent in 2012 from 15 per cent in 2011, as did its load factor, which sprung to 85 per cent last year from 75 per cent the year before.
Looking ahead, Singh said that India’s FDI policy would not only boost the industry locally but in other parts of Asia as well. “The various joint ventures (Tata-AirAsia’s proposal and the potential Jet-Etihad) are examples of growing business confidence in the Indian civil aviation sector.”
By Renuka Vijay Kumar
