Patel pitches for lower air fare

New Delhi, Nov 22 (PTI) Renewing his pitch for making air
travel cheaper, Civil Aviation Minister Praful Patel Saturday
asked airlines to slash fares in response to the government's
support to the aviation industry.

But Jet Airways chief Naresh Goyal voiced the industry's
concerns over the prevailing financial crisis and bluntly
said, "I certainly would not like to close down my company."
However, Patel, who shared the dais at the Hindustan Times
Leadership Summit here with Goyal and Kingfisher chief Vijay
Mallya, later exuded confidence that air fares would become
cheaper by December. "December onwards, you will see the fares
coming down," he said after the session.

At the session, the Minister said "perceptionally, the
government is trying its best to help you (aviation industry)
to tide over the situation...It has taken the onus to help
you. Now with the fuel prices coming down, you must match the
perception that fares are coming down."

With the general elections weighing on his mind, Patel
said "we live in a democratic set up and have to face the
people. Therefore, we want the entire aviation industry to
know that we understand your difficulties and are trying to
help you out."

Wanting the industry to reciprocate, Patel said the
airline's action in this regard "must reflect in better, lower
air fares for the passenger."

Replying to a question on the same issue which was
followed by wide applause, Goyal said "I like that clapping,
but I certainly would not like to close down the company."

Looking at liquor baron Vijay Mallya seated on his
side, the Jet chief said "you can live on liquor (his prime
business) but we can't".

Asked if he would ask state-owned carrier Air India to
reduce fares, Patel said, "We have never dictated what Air
India should do in terms of pricing or routes or capacity. But
AI, as a responsible government carrier, will also understand
that if the oil prices are coming down, so should the fares."

Building his case on the crisis facing the airlines,
Goyal said "we have a responsibility to our shareholders, we
need to protect our bottom line. We will do whatever the
government wants us to do, provided we are profitable."

Mallya also elaborated on the causes of the financial
downturn experienced by the industry, saying high taxes on ATF
was the major reason for mounting debts of airlines to oil
companies and the Airports Authority of India.

Another factor was the decline in the rupee value vis-a-
vis dollar as airlines have to make payments for acquisition,
leases and maintenance in dollar terms, he said.

Agreeing with Goyal and Mallya, the minister said "wrong
taxation policies" had been pursued by the erstwhile
governments which have also "failed to acknowledge that air
transport is a public mode of transportation."

Pointing out that there were 400 commercial aircraft in
India compared with 7,500 in the US and 5,000 in Europe, he
said the right infrastructure had also not been created and
there were no maintenance, repair and overhaul (MRO) facility
in the country.

Patel noted that there was "not a single (aviation) hub
in India" as earlier, airport infrastructure was not designed
by integrating domestic and international travel.

"Now in the next two years, we will have six world-class
hubs in Delhi, Mumbai, Kolkata, Chennai, Bangalore and
Hyderabad," he said.

The Minister said another area, which had been ignored so
far, was that of cargo. Today, there are only about five
dedicated cargo aircraft, including two of AI, operating in
the country.

He, however, told the two top airline bosses that the
majority of Indians would be interested in flying only if the
prices were competitive.

"You have to get the maximum number of people to fly," he
said, adding, the low-fare carriers like IndiGo and GoAir
would provide competition to the full-frill carriers in this
regard.
In response to the critical situation faced by the
industry, the government has asked oil marketing PSUs to
extend credit period and allow airlines to clear their dues
amounting to about Rs 3,000 crore by March next year. It has
also abolished the five per cent customs duty on ATF, as the
jet fuel prices declined considerably.