'Indian aviation infrastructure needs to be fixed'

By Staff
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Google Oneindia News

New Delhi, Mar 4: India must fix its aviation infrastructure quickly to support the growth in passenger and freight traffic, a top official at the International Air Transport Association (IATA) has said.

Mr Jeff Poole, IATA's director for industry charges, fuel and taxation, said India is a bright spot of opportunity for air transportation sector and ranks among the world's top six fastest growing markets.

International passenger growth is forecast at 7.9 per cent annually by 2010 while freight will expand even faster at 8.2 per cent. India's growth in 2005-06 was three times the world's average.

But the ''to do'' list for Indian aviation to fulfill its potential of being one of the world's greatest aviation market is remarkably similar to the global agenda: improve safety, increase efficiency, meet demand with cost-efficient infrastructure capacity and clearly understand the role of government.

''The weak link for India to fulfill its potential is infrastructure. India's airports are expensive and over-crowded with low service levels. The situation is most acute in Delhi and Mumbai.

Airspace is under similar capacity pressures,'' said Mr Poole.

If the problems are not solved urgently, he said, aviation's best story could become a nightmare.

When the planes arrive, they need space to land, park and to fly.

The government is wisely seeking private sector participation through public private partnership (PPP) projects to facilitate the necessary infrastructure improvements.

However, the expansion will not be a success if the PPP bidding process drives airport ownership cost to levels of an infrastructure bubble.

As infrastructure is developed with various forms of PPP, a process of economic regulation must be put in place to ensure cost efficiency, service standards and stakeholder engagement. The rush for investment and the natural monopoly position of airports must be guided if development is to be rational. While airline liberalisation was the feature of the 1990s, India now has both airline and airport privatisation to test stability and ongoing growth.

The need for a comprehensive policy statement and an economic regulator for civil aviation has never been more apparent than it is today. The proposed Airports Economic Regulatory Authority (AERA) has an enormous task and responsibility to husband future civil aviation growth in India, said Mr Poole.

There is no effective competition for India's airports. The government has a threshold for airports of 1.5 million passengers per annum as the proposed threshold for economic regulation.

This is a reasonable threshold but only as long as the uneconomic airports below that level do not require cross-subsidisation from the regulated airports.

In addition, the government has determined that any new greenfield airport will not create competition for the incumbents.

This is a sensible policy at least for the next decade, said Mr Poole, as scarce resources need to be wisely allocated.

But by eliminating competition and entrenching the airport monopolies, the government has also consolidated the need for effective economic regulation to ensure reasonable outcomes for all stakeholders, which include airlines, travellers, governments, shippers and the general public.

To promote stability and to be fair to all stakeholders, said the IATA official, the charter and processes of an economic regulator must be clearly defined with the actual regulations being neither too light nor too proscriptive in both its role and capacity for judgment.

UNI

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