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Government should let foreign airlines bid for Air India, says IATA boss

International Air Transport Association (IATA) Chief Executive and Director General, Alexandre de Juniac, proposed that the Indian government should sell its shares in the national carrier, Air India.

De Juniac lauded the government’s move to divest its stake in Air India.

“We support privatization of Air India. But the company has to be privatized in right conditions,” De Juniac remarked.

Pressed to elucidate on what the right conditions were, de Juniac said the government should not hold any stake in the carrier after privatization.

“For sale process, the government can keep a part stake initially but the government should eventually exit Air India. The government could allow foreign carriers also to bid for Air India.

“We do not see any problem in countries owning stake in any other carrier, as various global carriers have such stake, recognizing that the government have to decide on the limits of it,” De Juniac explained.

The government has decided to privatize Air India and still is finalizing the details on the procedure of its sale.

The IATA believes that India’s aviation market – already considered to be the fastest growing market in the entire world – would continue its growth. However, it also feels that the constraints involving infrastructure together with issues surrounding taxation would hinder more growth.

“We are worried about how large airports are getting saturated. Mumbai has saturated and also the cost of infrastructure is too high. India is a promising market and infrastructure and taxation issues need to be resolved as early as possible,” De Juniac said.

IATA suggested that the government try to regulate the rise in cost of airport infrastructure after privatization, as it impacts airlines’ cost of operations.  

With regards to the goods and services tax (GST), De Juniac said these needed to be resolved.

“GST is a good reform and is definitely a better tax structure but the devil lies in the details and we have some issues with it,” he said.

“Fees and charges imposed on passengers should not be included while calculating GST and ancillary revenues and fares should not be charged under same GST rates.”

De Juniac also said IATA wants GST purposes and definitions of ‘continuous journey’ and ‘stopovers’ under the law and rules on service, where it is conducted by a provider other than the service provider, charging the revenue.

In interline and code share agreements, fares may be levied by a certain airline but the flight is operated by some other airline.

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