Home | Feedback | Contact Us
Interview Of The Month  

ILJ's Vikrant Pachnanda spoke to NitinSarin, Managing Partner, Sarin& Co., about various challenges that lie before the rapidly growing aviation industry in India.

Ques: : What is your view on the growth of the aviation sector in India in light of several key developments such as the proposed Jet-Etihad deal, Air Asia starting a low-cost airline in the country in partnership with the Tata Group and All Nippon Airways looking at carriers such as Go Air and Spicejet for purchasing a stake amongst others?

Ans: The need of the hour is increased aviation services in India, one must keep in mind that we can a country with over 1 billion people, most of whom, travel by means other than by air. The recent developments like the Jet Airways – Etihad Airways deal are good moves towards a more liberalized India Aviation sector. As Indian airlines are struggling to find investors from within the Country itself, these other carriers looking to purchase stakes in Indian airlines is a welcome move. Apart from the ever important money that such deals brings into the Aviation Sector in India, it also brings in invaluable expertise which these other "mega" airlines possess, something our relatively smaller and inexperienced Indian airlines are benefit from. Though, one must commend our India airlines for functioning well in in the stifling environment prevailing at the moment in India. Our airlines are being starved my extremely high taxation on ATF and other commodities which are imperative for the smooth functioning of an Airline. This move by bigger international airlines is welcomed and will help in sharing the burden, which currently only our Indian airlines face. Apart from that, I am sure that the Regulators will also benefit from gaining the technical and regulatory know-how from these larger airlines.

At the same time, our Regulators should keep in mind that they are there to promote our Airlines, and not stifle them. The recent upheaval about the Jet Airways – Etihad deal, only goes to harm our image to the rest of the world. I hope the said deal is approved and closed soon.

Also, one must keep in mind that our private airlines do not have bottomless pockets of money, which they can resort to in time of dire need, unlike our State run airline.

Ques: Where do you see the aviation industry five years from now and what are the various avenues within the sector where you anticipate growth?

Ans: : I see the aviation sector in India, over the next 5 years becoming a large, mature and stabilized sector. We hopefully have passed the most turbulent times in our aviation history – starting from the aviation rush, to the demise of Air Deccan and ultimately to the demise of Kingfisher Airlines. With the introduction of new, well experience players like Air Asia, hopefully, the industry will settle down and start making some well-earned profit. A great example of our growth till now is visible through airlines like Indigo and Go Air, they have played their game right and are on the path to make successes of themselves.

The key areas where I expect growth within the sector are cargo, ground handling services and aircraft maintenance / growth of MRO’s. Once again, I am hopeful our Government will promote the business of MRO’s, so we can attract other South Asian countries to send them aircraft to India for maintenance, repair and overhaul.

Ques: What according to you could be some possible legal hurdles that could affect the growth of aviation in India?

Ans: The legal and other hurdles which could jeopardize the growth of aviation in India are, in my opinion, all caused by over regulation. At the moment, each and every aspect cannot proceed without the permission or authorization from the Government of India. We must open up the market to new players and let the consumers decide on the fate of the airlines.

Also, an issue, which is of grave importance these days, is over the implementation of the Cape Town Convention. As you know there have been recent issues over repossession of aircraft from the Country, I have been personally involved heavily with this issue. We are trying to push the Government of India to implement the CTC into local legislation. For that purpose, we are working hard with the GOI, the Aviation Working Group and others. This is the single most important hurdle the aviation industry must cross at this point in time.

If incorporated into local law, not only will India rise in the eyes of lessors / financial institutions but our airlines will benefit from lower finance costs and lease rates.

Ques: Over the last year, India along with China has been one of the major countries opposing the Clean Air Tax which is going to be shortly unilaterally imposed by the European Union on all airlines taking off and landing within the EU. What is your take on this?

Ans: My answer is short and simple. When our carriers in India are so heavily burdened with taxes, who are we to complain about taxes imposed by the EU? We must first take a long look homeward before we can get on the offensive and complain about taxes being levied by consortiums of Countries like the EU.

My personal opinion is that the EU will suffer with the imposition of the "Clean Air Tax" and the rest of the world will not go down without a strong fight, especially with the USA being at the forefront of the opposition group.

We recently had the same issue open for debate at the Leiden Sarin International Air Law Moot Court Competition, which was held in Abu Dhabi in March 2013. It was interesting to see the various points of view, which were thrown up by the students of law. However, in my personal view, the long run will show difficulty in implementation of this Tax by the EU.

 
© 2007 India Law Journal   Permission and Rights | Disclaimer