AirAsia CEO Tony Fernandes hit the nail on the head when he said that the reason large numbers of people are unable to fly in India is steep domestic airfares. In many cases, one-way fares for flights within India exceed the cost of return tickets to cities in the Far East. Not surprisingly, the number of domestic passengers dropped by as much as 5.2% in the last financial year. But despite high ticket prices most airlines continue to post large losses.
The primary reason for this mishap is government policies which burden the industry. This has pushed airport charges in major metros like Delhi and Mumbai sky-high. And state government taxes further erode profitability by charging up to 30% taxes on aviation fuel. Such heavy taxation blithely ignores the multiplier impact of civil aviation, which ensures that every Rs 100 spent on air transport brings in benefits worth Rs 325 to the local economy. Moreover, every 100 jobs created in air transport add another 600 jobs in other sectors.
03/07/13 Times of India
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