India's highly competitive aviation sector is in "crisis," crippled by high costs and exorbitant taxes, the International Air Transport Association (IATA) said on Wednesday.
India's major carriers, including state-owned Air India, lost around $2 billion in the last fiscal year to March and are carrying debts of some $20 billion.
"India's aviation is in a multi-faceted crisis. Before the aviation sector can deliver greater benefits to the Indian economy, this crisis must be resolved," IATA director general Tony Tyler said.
The global aviation industry is watching the Indian sector with concern, Tyler told a business audience in New Delhi, noting that of India's six main carriers only privately owned Indigo is making money.
"The financial situation of Kingfisher (owned by liquor baron Vijay Mallya) is dire and (state-run) Air India is on government life support," Tyler said.
Tyler called for coordinated government and private sector policies to nurse the sector back to health.
He said that the aviation sector was reeling from high costs, rising taxation and inadequate infrastructure.
Tyler also urged the government to reduce charges at Indian airports.
Regulatory authorities recently approved a 346 percent increase in charges at Delhi airport -- adding more than $400 million in costs for airlines, Tyler noted.
The government is considering allowing foreign airlines to take stakes in domestic carriers, a step that carriers such as debt-laden Kingfisher see as a potential lifeline.
But if "critical domestic problems are not addressed, foreign investors will not be lining up to put their cash in Indian airlines," Tyler warned.
"Under current circumstances, investors cannot see how they could ever see a return," he said.
|Aviation BPO Executive|