'Golden age' for Indian aviation sector; fundamentals strong: IndiGo chiefPTI | New Delhi | Updated: 17-11-2019 15:44 IST | Created: 17-11-2019 15:28 IST
With strong fundamentals, India's civil aviation sector is in its "golden age" and there is also healthy competition among domestic carriers, IndiGo CEO Ronojoy Dutta has said. Interestingly, the country's civil aviation sector has been experiencing lower growth in traffic compared to previous years and there has also been softness in fares in October, according to industry experts.
The traffic grew just 1.18 percent in September, as per the latest available official data. IndiGo, owned by InterGlobe Aviation, is the country's largest airline with a market share of 48.2 percent in September.
While acknowledging that there are problems, including high taxes on jet fuel, Dutta said there are huge opportunities going forward. "We are in the golden age of Indian aviation and there are huge opportunities going forward... There are always problems, there are always issues and economic cycles. (But) The fundamentals are strong," he told PTI in an interview.
According to him, tax on aviation turbine fuel (ATF) is 30 percent higher than the rest of the world. Bringing ATF under the Goods and Services Tax (GST) has been a long pending demand of the airline industry.
"Then there are throughput charges for which we should be getting credit for taxes paid," he added. IndiGo has been aggressively expanding its operations and has started 11 overseas routes in the last year. Recently, it placed an order for 300 more planes from Airbus and is also considering wide-body aircraft for long haul routes.
On whether there is healthy competition among local carriers, Dutta replied in the affirmative. "We have a commonality of interests. Airlines around the world have commonalities (of interests). It extends to ATF taxes, infrastructure issues. In terms of who gets which rights and who flies where, it is all fierce competition," he noted.
He also made it clear that there are no plans for a loyalty program for passengers. "We have studied it. We have rejected that option... It is too expensive. We are a low-cost carrier and we have to keep our costs low," Dutta said.
When asked whether passenger volumes could balance the costs arising out of a loyalty program, the IndiGo chief replied in the negative. "We have the volumes already. The question is will the incremental volumes pay for it. Given the cost, the incremental volumes do not pay it," he noted.
In September, the carrier flew 55.59 lakh passengers.