Page 27 - AAA JULY - AUGUST 2014 Online Magazine

FEATURE CLEAR SKIES

advise the DGCA not to permit AirAsia Singapore Airlines, for their JV, Tata vary widely - from 4% to 30% making
India to proceed to fly, that too with SIA Airlines. Again the FIA sought to cost of ATF in India about 60% higher
merely one aircraft ….”. Air Asia India prevent the airline from entering India than international levels”. It adds
is a Joint Venture (JV) between AirAsia or at least delaying matters arguing that that “West Bengal deserves a special
Berhad (49%), Tata Sons (30%), and Arun foreign airlines cannot invest in start-up mention as it is the first large state in
Bhatia’s Telstra Tradeplace (21%). airlines according to government policy. the country to declare zero per cent
Air Asia India managed to surprise Tata SIA has already begun to recruit Sales Tax on ATF at its regional airports
rivals by obtaining approvals and beginning staff and is slated to begin operations by and 15 per cent Sales Tax on ATF used
operations from Bangalore-Goa this June October, when the festival season means by additional flights started at its metro
with a brand new Airbus A320. July will passenger traffic will be high. airport in Kolkata.”
see the airline beginning flights from The airline will have a fleet of 20 Another important aspect is that
Bangalore-Kochi (offering tickets in a A320’s acquired at the rate of 5 per year. there only a few private airports in
limited promotion for an all-inclusive fare This will be a full service offering unlike India with the majority operated by
of Rs 500!). It already operates twice a day Air Asia India’s low cost offering and Tata the Airports Authority of India (AAI).
on the Bangalore-Chennai route and will Sons own 51%, with SIA holding 49%, and Hence airports are have no option but
take delivery of an additional nine aircraft received a go ahead from the Foreign to use these airports and AAI owned and
to make up its initial fleet strength of 10 Investment Promotion Board (FIPB), last operated airports are hardly the most
A320’s, at the rate of approximately an year in October. business friendly.
aircraft a month. The true test for both airlines will be According to Amber Dubey, Partner
However, it will need to wait before navigating the turbulent skies that make and India Head of Aerospace and
operating on the more lucrative India’s domestic civil aviation market. Defence at KPMG “The beauty is that
international sectors as a result of a rule Losses continue to mount despite our challenges are primarily related to
that permits an airline in India to operate on passenger traffic increasing as a result of policies, procedures, regulations and
international sectors only after completing unsustainable pricing and the high cost of taxes. These are all man-made problems
five years of domestic operations with a fuel (typically 50 % of cost of operations), and hence surmountable. The central
minimum of 20 airplanes! make squeezing out profits a tough task. government and the eastern states have
Matters haven’t been easier for According to a KPMG report, “State brought in many reforms in the aviation
the formidable team of Tata Sons and surcharges on Aviation Turbine Fuel policy, procedures and taxation.”

AirAsia India will take
delivery of an additional
nine aircraft to make up
its initial fleet strength of
10 A320s.
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