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India, China to lead aviation industry growth: IATA

December 13, 2012 18:24 IST

India, China and Latin America would continue to lead the growth next year in the global aviation industry which would improve its profit from $6.7 billion to an estimated $8.4 billion, IATA said on Thursday.

While Chinese domestic market continues to expand "very strongly" despite a slowdown earlier this year, the Indian market by contrast went into a "sharp reverse" in 2012 following the problems faced by Kingfisher Airlines and the slowdown in the Indian economy, the top brass of the International Air Transport Association (IATA) said.

IATA officials were critical of India on issues relating to the privatisation of airports in Delhi leading to high airport charges as well as taxation.

"India, for example, developed Delhi into a first class hub airport with the participation of private partners. The facilities are great. But the structure of the concession agreement requires the concessionaire to return 46 per cent of topline revenue to the government," ATA director general and CEO Tony Tyler said, adding that the airport regulator AERA approved a hike of 346 per cent in airport charges.

"That is unacceptable for the industry. And a more realistic concession agreement might have prevented it," he said in reply to questions.

However, he pointed out that "since our protests," the Indian Civil Aviation Ministry "has directed the airports to remove airport development fees (from January 2013). The challenge now is to make sure that this is implemented."

Asking governments to "ensure that privatisation is well regulated," the IATA chief said "the tax receipts from the economic activity generated through aviation-enabled connectivity far outweigh the short-term economic gain of a misguided


On issues relating to high taxation on aviation and jet fuel, Tyler was severely critical of UK government for imposing air passenger duty, calling it "the biggest tax on aviation in the world."

Maintaining that IATA would continue to talk to UK government on this "crippling" duty, he said the global airlines' body would keep on fighting similar departure taxes in Germany, Austria and other countries. "We will be vigilant in providing strong arguments against other governments wishing to increase tax burden."

Making a presentation on the global financial outlook of the aviation industry, IATA chief economist Brian Pearce said China, India and Latin America would continue to lead the growth in passenger and air cargo traffic. By 2016, "we would see that 38 per cent of global air travel will focus on routes to, from, or within Asia-Pacific," said IATA chief Tyler.

But he pointed out that the Indian market has "gone into sharp reverse in 2012 following the problems of Kingfisher Airlines and the slowdown of the Indian economy."

India's domestic growth was growing at a pace equivalent to that of China till late 2011, but then fell, Pearce said, adding this could be the results of "an adjustment of unsustainable growth."

He, however, also pointed out that Asia-Pacific airlines, despite the economic strength of their region, have seen "the second weakest expansion over the past five years."

The IATA also forecast that the passenger numbers would continue to expand in 2013, moving above the three billion mark to 3.1 billion, with Tyler saying "almost exactly 100 years ago that number was precisely zero," with 2013 marking the 100th anniversary of commercial flights. "In that space of time, aviation has truly changed the way that the world works."

Amitabha Roychowdhury in Geneva
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