New Delhi: Airlines can bolster India’s economic growth if the government cuts taxes and spells out an aviation policy to help them expand, said Willie Walsh, chief executive of International Consolidated Airlines Group SA (IAG), which runs British Airways and the Spanish carrier Iberia.
Walsh, who was in New Delhi on Tuesday to attend an aviation conference, welcomed the aviation secretary’s statement that the government will encourage Indian carriers to fly international routes, a sector dominated by foreign airlines.
“(But) I think there is a contradiction... there is very high level of tax here,” he told reporters at the sidelines of the conference. “You can’t expect airlines to grow and help fuel further economic growth and at the same time impose very high levels of tax either through the fuel tax or service tax. That’s clearly going to damage the airlines. So I think the call for a more comprehensive aviation policy is a good call.”
Jet fuel in India is considered to be among the most expensive globally. Indian carriers have sought reduction of state-level sales tax on the fuel.
Overseas carriers currently control 60% of international air traffic to and from India, while Air India Ltd, Jet Airways (India) Ltd and Kingfisher Airlines Ltd account for the rest.
Civil aviation secretary Nasim Zaidi had said earlier on Tuesday the government will back Indian carriers to fly to overseas destinations and utilize their capacity optimally.
Zaidi also said a proposal to allow foreign airlines to buy stakes in Indian carriers is under consideration.
IAG, which was formed by the merger of the British and Spanish carriers in January, would consider investing in an Indian carrier if the rules are relaxed, Walsh said.
“At the moment we can’t do that, but if those rules change, I think a lot of airlines, including IAG, would look at whether the opportunity was a good opportunity,” he said. “If the rules open for India, I will come to India.”
The executive did not specify the minimum equity stake that IAG, Europe’s second biggest airline group after Lufthansa AG, would want to consider investing in an Indian carrier.
British Airways has sponsored Kingfisher’s entry into the global airline alliance OneWorld. Walsh said the airline was the “best fit” for the alliance at the moment.
In February, Walsh had told Bloomberg that a low-cost carrier feeding short-haul routes into British Airways and Iberia’s long-haul routes would fit into the group.
No acquisition talks are going on, he said on Tuesday. “At the moment we are absolutely delivering the synergies that we have identified for BA (British Airways) and Iberia….We are not engaged in any discussions or any considerations further at this time.”
British Airways, which flies 45 flights a week to India, does not plan to expand its services in the country, he said.
“The international market has recovered from depths of recession in 2009 and although India escaped that recession, I think the airline industry clearly suffered from it. But it’s nice to see it’s recovered,” he said. “But at the moment we have no plans to add capacity to that market.”