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High costs hitting FDI in India's aviation sector: IATA

International Air Transport Association (IATA) chief Tony Tyler has said foreign airlines would not pick up stake in cash-strapped Indian carriers till steps are taken to stem the high costs of aviation operations in India.

BT Online Bureau   Geneva     Last Updated: December 25, 2012  | 18:10 IST

International Air Transport Association (IATA) chief Tony Tyler on Tuesday said foreign airlines would not pick up stake in cash-strapped Indian carriers till steps are taken to stem the high costs of aviation operations in India.

"As long as high taxes prevail, high airport costs and congestion, and poorly developed air navigation (services) means more congestion, high cost of operations exist, you are not going to get a lot of people to invest in airlines," the Director General and CEO of the IATA said at his operational headquarters.

He was replying to questions on Indian government's recent decision to liberalise FDI policy in aviation, allowing foreign carriers to pick up a maximum of 49 per cent equity in their Indian counterparts.

"No, I don't think it (allowing foreign airlines to invest in Indian carriers) is a game changer but it is a good thing. But it will not solve the problems of Indian aviation. It certainly is a step in the right direction but it is not the panacea that some believe it is," Tyler told PTI in an interview in Geneva.

Observing that there were restrictions on investing in airlines around the world which was "a problem for the industry", Tyler said "any move that we see in liberalising, is a good thing.

"But unless conditions in India are improved for the airlines, you are not going to see a flood of foreign carriers coming into the industry. Because foreign capital needs a return just as anywhere else."

With inputs from PTI

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