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HomeNewsAviationCAPA : Develop a long-term framework for aviation

CAPA : Develop a long-term framework for aviation

Inaugurated by Peter Harbison, Executive Chairman, CAPA (Centre for Asia Pacific Aviation), the Summit saw captains of the industry discussing the broad spectrum of issues pertaining to the Indian aviation industry. Harbison, in his inaugural speech, talked about the opportunities that the Indian aviation sector offers. “Indian aviation has tremendous advantage. It’s private airlines are world class, airport infrastructure is improving and the Airports Authority of India (AAI) as well as private operators are raising delivery levels. The Union Minister for Aviation and the leadership team are forward-looking and foreign ownership restrictions in aviation are being lifted.” He also outlined some of the challenges that have been hindering the growth of the sector. According to him, infrastructure in the country is massively under-developed and there is too much political intervention. Moreover, there has been unacceptable Air Traffic Control delay and shortage of capacity. “All of this has led to reduced travel and less inbound tourism to India,” he said, adding that it is essential for aviation industry bodies to come together to help develop a long-term framework for aviation in the country, instead of focusing on issue-specific lobbying.

A similar opinion was echoed by Kapil Kaul, CEO, South Asia, CAPA. “Despite recent challenges, the underlying fundamentals in the market remain strong and the long term prospects for India are amongst the most exciting in global aviation,” he said. According to him, CAPA organised this Summit to prepare the key stakeholders and aviation think tank to face the next wave of growth sustainably and profitably. This is due to the fact that India is expected to emerge as the third largest aviation market in the world before 2020. Kaul also believes that there is the need for a cohesive approach from the government and stakeholders to bring in positive changes in the sector. He opined that the industry needs to be more united to play a stronger advocacy role. Moreover, hotels and tourism operators have to get involved and state governments must take more responsibility.

The sessions at the Summit focused on issues like how quickly the aviation sector in India can recover from the current challenges, the prospects for policy and regulatory reform, how the market achieves cross-party agreement, what is the vision for the aviation sector and how India prepares to become a billion-passenger market within a single generation amongst others.

Hitting hard on the policy matters, Capt G R Gopinath, Chairman, Deccan Charters said, “Earlier, the government made rules for Air India and then modified it for Jet Airways, then for Kingfisher, and later in favour of airports. Rather than making rules for the aviation industry of the country, it started formulating policies for airline companies and airports,” he said and recommended that there is need for a strong aviation policy in the country. “There is cartelism in fixing the prices. There is just a gap of Rs 500 between an LCC and a full-service carrier. We need to break the cartel and not only have LCC, but low-fare airlines; otherwise the market will not expand,” he added.

Sudheer Raghavan, COO, Jet Airways, emphasised on having a unique structure for the sector. “Primarily, aviation is a price elastic market in India, so we need to have a unique structure. Besides, we have a taxation regime. Today, we do not have the sustaining power and our banks also don’t have a model to help airlines. We do not understand that we have a strong travel market and that’s the reason that international airlines are looking to tap India,” he said. According to him, the regulatory policies and taxation issues are not favourable for full service carriers. “It is just the reverse of what airlines in other countries have,” Raghavan opined.

Speaking on the sidelines of the summit, V P Agarwal, Chairman, Airports Authority of India (AAI), said that India would require 200 airports by 2020 for general aviation purpose. “Air transport has grown at twice the rate of GDP. For the past several years, the growth has been impressive with international passengers growing at CAGR of over 14 per cent and domestic at almost 22 per cent,” he informed.

Talking about the factors affecting funding in the Indian aviation industry, Suresh Goyal, CEO, SBI Macquarie Infrastructure Fund, said that investment returns should be risk-free. “Long term capital needs stability of regime and regulations, and investment opportunities in the aviation sector in India are scarce,” Goyal said.


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