India is a challenging place to do business, the head of the International Air Transport Association (IATA) said, adding that poor infrastructure and government policies add to the rising cost burden for airlines.
"IATA members tell me it's very difficult to make money in India ... India is a challenging place to do business because of poor infrastructure and government policies impose excessive cost," Alexandre de Juniac, CEO General of IATA, an airline industry lobby group, said at the International Aviation Summit on Tuesday.
The IATA represents more than 280 airlines in different parts of the world. Its members include Air India, Jet Airways and Vistara.
According to de Junaic, India's aviation industry is showing contrast as on one hand there are infrastructural and economic issues plaguing the sector while on the other, airline companies are busy buying planes to meet the demand.
With a surge in domestic air travel demand in India, the country's airlines are gearing up for a rise and have ordered around 1,000 aircraft over the next eight years.
But despite traffic growth, the financial outlook for domestic airlines has deteriorated dramatically since January.
The domestic airlines industry is expected to post higher losses at $1.65-1.90 billion this fiscal year, up from projected $430-460 million, amid the headwinds due higher costs and lower yields, the India unit of Sydney-based Centre for Asia Pacific Aviation (CAPA) Monday said in its Mid-Year Aviation Outlook 2019.
de Juniac also criticised about the ongoing delay in opening the Navi Mumbai International Airport.
"Two-decade delay in Navi Mumbai airport ... No one expects Navi Mumbai (airport) to open by 2019," said de Juniac.
The Navi Mumbai airport, a much-delayed project, was first proposed in 1997 as a secondary airport to support the busy Mumbai airport.
Estimated to cost Rs 3,000 crore, the Navi Mumbai airport received the government’s approval only in 2007 but has missed several deadlines owing to political indecision, issues of environmental clearances and the funding.
The airport is being developed under a public-private partnership model between GVK Group subsidiary Mumbai International Airport and City and Industrial Development Corporation of Maharashtra Ltd as the project implementation agency.
IATA chief also flagged concerns over levying goods and services tax (GST) on overseas air tickets, saying it violates international norms and also weakens the competitiveness of carriers.
"It is wrong to apply GST to international tickets. It contravenes international agreements to which India is party," de Juniac told news wire PTI in an interview in July.
The GST rate is 5 percent and 12 percent on economy and business class tickets, respectively.
First Published: Sept 4, 2018 12:16 PM IST
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