Not easy for airline to make profits in India: IATA official

It is not easy for an airline to make a profit in India and many issues such as price caps and high jet fuel taxes (ATF) need to be addressed, a senior IATA official said on Sunday.

Philip Goh, Regional Vice President for Asia-Pacific of the International Air Transport Association (IATA), made the remarks during a press conference at the 78th Annual General Meeting of the global airline body. airlines here.

When asked if Vistara and Air India should be merged into the Tata Group, he replied: “Both (Vistara and Air India) are full-service carriers. Vistara is still quite small and although they are in business for 5-6 years, they are still loss making.It is not easy to make a profit in India.A lot of problems to overcome.

Goh said he was sure some sort of discussion needed to take place between the Tata Group and Singapore Airlines over the merger of Air India and Vistara.

“It makes sense to look at synergies between two similar full-service carriers,” he told reporters.

While talking about India, Goh said pricing should be left to the airlines and should not be governed the way it is governed.

Goh said taxation – on fuel and otherwise – is still an issue for airlines.

Any measures taken by the government that increase costs for airlines are bad for the economy of the aviation sector, he said.

The Ministry of Civil Aviation had imposed lower and upper limits on domestic air fares based on flight duration when services resumed on May 25, 2020, after a two-month lockdown due to the pandemic. For example, airlines currently cannot charge a passenger less than Rs 2,900 (excluding GST) and more than Rs 8,800 (excluding GST) on flights lasting less than 40 minutes.

The Tata Group took control of Air India and its subsidiary Air India Express on January 27 after successfully winning the airline tender on October 8.

The Tata Group holds an 83.67% stake in AirAsia India, while the remaining stake in the airline is owned by Malaysian carrier AirAsia Berhad.

The Indian Competition Commission announced on June 16 that it had approved the proposed acquisition of the entire stake of AirAsia India Ltd by Air India Ltd.

Vistara is a joint venture with Tata Group and Singapore Airlines holding 51% and 49% of the shares respectively.

“I think Tata’s initiative (to merge AirAsia India with Air India) within their own group makes sense. I think if you have four vehicles within the same group, you need to find ways to streamline synergies within within the group,” Goh said.

If Tatas forms a strategy correctly, Air India could become a very powerful player in the Indian international market, he noted.

Air India can certainly be strengthened and if anyone could do it, Tatas could do it, he said.

“It’s very positive for India that this has happened and we look forward to seeing how it plays out in the next couple of years,” he noted.

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