Worried that airlines are making losses despite increase in air traffic, government today pinned hopes of growth on the next year when some new airlines are proposped to be launched.
Civil Aviation Minister Ashok Gajapathi Raju said the aviation industry was "seriously affected" by high operational costs including cost of aviation turbine fuel, service tax and other charges, shortages of maintenance facilities, high foreign exchange rate and competition from foreign airlines.
There is a high customs duty on import of private aircrafts and helicopters also, he said.
Noting that aviation was acknowledged as a growth engine which has a force multiplier effect, he said as per global estimates, for every USD 100 worth of input, there is USD 325 worth of output generated.
For every 100 jobs created in the aviation industry, there are 610 jobs created in other industries, he said.
Despite high air traffic growth rate, "most of the airlines in the country are reported to have incurred losses and some airlines are struggling to stay afloat," he said while addressing a meeting of Chief Ministers and state Civil Aviation Ministers here.
Expressing hope that the new year would bring a change on the growth trajectory of the industry, he said the government proposed to have "more new airlines in the coming year."
Raju sought to reach out to states, urging them to join the Centre in its initiatives to promote air connectivity.
"The states understand the need to lower taxes. Some states have already come on board," he said.
He said the government was also working on a package to promote connectivity and airports in the Northeastern states.
Minister of State for Civil Aviation Mahesh Sharma said the Ministries of Civil Aviation, Tourism and Culture have to work together "to realise the great potential that India has in the civil aviation sector".
