Praful Patel at BS Open Sky Summit

Civil Aviation Minister Praful Patel today said that he saw airports decreasing their landing and parking charges for aircraft as a way in which airports can contribute to a "form of relief" for the loss-making aviation industry.

In his keynote address at the Business Standard Open Sky Summit 2008, Patel spoke at length about the problems being faced by the aviation industry today. He added however that his ministry has not initiated any talks as yet with airport authorities but that this was going to be looked into.

Replying to a question on whether the government was offering any kind of cash bail-out package to the industry, he said, "Unlike other countries, in India it is very difficult for the government to write a cheque to the companies."  When asked about the quantum of reduction of air transport fuel (ATF) prices that could make a difference to the cost of air travel which seems on a northward spiral, he said that the number was close to 50-60 per cent of current prices.

Regarding high sales tax on ATF levied by states, Patel said that states cannot treat revenues from sales tax on ATF as cash cows because it could be a very short term vision. If on account of high sales tax on ATF air connectivity within states is affected, a lot of the aspects of growth will also be affected. "Our good intentions have not been understood by the states so far," he said. A meeting of the Empowered Committee of State Finance Ministers on ATF prices to be held in Srinagar yesterday had been deferred.

Of the Rs 8,000 crore ($2billion) losses predicted for the airlines industry almost Rs 4,000-5,000 crore is on account of ATF price hike including base price and taxes levied. Talking about airlines, he said that in a bid to be more competitive, airlines had increased ticket prices by themselves. He added, however, that the industry was now trying to be more self regulatory and more responsible and "we can see better pricing".

On the greenfield airport policy, Patel was very clear that one could not expect to see more infrastructure enhancement from states, but from private players. "We already have 100 per cent FDI in greenfield projects, we have single window clearance which makes it easier for private players to invest in greenfield airports." He added, "In the coming years we see at least some new initiatives taking place, and some initial licenses being given for start-ups."

Talking about airline losses, he said that such a situation has been there in the US as well where many airlines have folded up. "We have strived towards a situation where such a scenario does not materialise," he said.