IATA chief says India's aviation infrastructure in crisis

INTERNATIONAL Air Transport Association (IATA) director general Giovanni Bisignani told an audience at the Singapore Air Show that the physical and cost structures of India's air services industry were in a state of crisis.

The statement was the latest in a series of IATA criticisms of India since the country's Civil Aviation Ministry unexpectedly decided to subject carriers to increased airport fees in 2008, and again the following year.

Mr Bisignani said that the rate increases in 2008 had caused airlines to suffer losses totalling US$1.5 billion. The governing body, in its 2009 annual report meanwhile, noted that the price hikes at Mumbai and New Delhi's airports came as a surprise to operators.

A report by Hindu Business Line concurred with Mr Bisignani's assessment, stating that high operating costs and poor infrastructure had restricted the growth of air cargo and passenger traffic in the country.

Infrastructure in particular, specifically the lack of warehousing facilities and multi-modal links, has long been a source of consternation among cargo operators. Nevertheless numerous new carriers, such as Kingfisher Airlines' Kingfisher Xpress, continue to flourish, with Air India and Jet Airways also announcing plans to launch dedicated new offshoots.

Until recently, passenger carriers did not view the cargo business as a potential revenue source. National airline Air India, for example, only operates 20 dedicated freighters. This is not to suggest a lack of capacity however, said Ernst and Young transaction advisor Sushi Shyamal. What the market needs, he said, is an integrated-logistics approach covering the first and last mile of connectivity, a prayer, which may soon be answered in the form of a new multi-modal hub slated for development in the city of Nagpur.

While the cargo front may offer some hope, IATA would likely still have cause for concern on the passenger side, with recent national budget proposals calling for an increase in jet fuel tax and an added 10 per cent levy on all passengers. Carriers are expected to make up for any rises in operating costs by raising fares. The 10 per cent passenger levy meanwhile is only being imposed on first and business class travellers.

(Source: www.Schednet.com)