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Working with Kingfisher to revoke suspension: Iata

The International Air Transport Association is in talks to reinstate Kingfisher Airlines into its billing settlement plan after suspending the Indian carrier last week for non-payment of fees.

The International Air Transport Association (Iata) is in talks to reinstate Kingfisher Airlines into its billing settlement plan (BSP) after suspending the Indian carrier last week for non-payment of fees.

The action to suspend Kingfisher was not unprecedented, Tony Tyler, director general and chief executive at Iata, said on Thursday. ?We had to suspend Kingfisher from the BSP. It was necessary to protect the whole system. We are discussing with Kingfisher the terms for their reinstatement. We hope they overcome their difficulties and hope to reinstate them,? Tyler said.

Iata?s BSP is a payment gateway for travel agents. Remittances to airlines are also made through this. Iata has asked Kingfisher Airlines to make the deposit fearing that the airline may not be able to honour ticket refunds because of insufficient revenue.

Tyler said the proposed hike in tariffs at Delhi airport will further hit airlines. Delhi airport had proposed over 700% hike in tariffs and Airports Economic Regulatory Authority of India (Aera), a tariff regulator, has proposed a 300% hike. Tyler said that even the the reduced tariff proposed by Aera was unacceptable. ?There will be a ripple effect on economy. Airlines will have to review viability of their operations,? he said.

He said that 2012 is not going to be easy for Indian airliners due to higher taxation, airport charges and infrastructure constraints. ?The increase in airport charges calls for a review and India cannot become an aviation hub if such high increase in the charges are levied,?? Tyler said. There has to be a common vision with a National Aviation Policy, he added. ?The ministry of civil aviation should intervene in the discussion of the proposed increase in the charges at the Delhi International Airport,? he said.

Besides, all jet fuel is subject to 8.24% excise duty and domestic flights face state fuel taxes up to 30%. As a result, fuel represented an average 45% of the operating costs for India?s airlines against global average of 32%. ?The high cost of fuel is hijacking the competitiveness of the Indian air transport industry for a decade,? he said.

On the capacity expansion in Mumbai, he said the phase I of Mumbai is expected to open in 2014, but construction has not even begun as land acquisition is not yet complete. ?Mumbai is bursting at the seams,? he said.

On a positive note, he said that the proposed 49% FDI in Indian airlines will allow strategic tie-ups with foreign airlines similar to arrangements that have successfully strengthened airline groups globally. There is immense potential for aviation sector in India if issues relating to costs, taxes and infrastructure are addressed. The Indian aviation was growing at twice the global average ? about 12% domestically and 9% internationally.

?The Indian aviation industry that I see today faces major hurdles. Air India is being sustained on life support of state aid. The difficulties at Kingfisher are well known. And the sector as a whole is not generating the sustainable profits that one would expect from such a large high growth market,? Tyler said.

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First published on: 16-03-2012 at 03:09 IST
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