19 May,2009 01:46 PM IST | | PTI
The new Government to be sworn in soon must create a legal framework to prevent a monopolistic regime in the aviation sector, Capt G R Gopinath, founder of the country's first budget air-carrier, Air Deccan, said.
"The new Government must immediately create a legal framework for preventing a monopoly in the aviation sector. The Competition Commission should be provided with legal teeth to deal with monopolistic situations," Gopinath, who is Chairman and Managing Director of Deccan Express Logistics, said.
Asserting that competition was needed and should be welcomed in the private sector, Capt Gopinath said that, "You must privatise but not monopolise. The airline sector needs to be kept out of a monopolistic regime." In order to have more competition in the aviation sector, the Government should grant licences to more private operators, he said.
"We need to increase the consumer-base which will happen when the cost-base is low. The Government should provide more licences to the airline sector just like it is giving to TV channels," he said. Even though TV channels are not making money, the Government is still providing licences to them. If the same is applied to the aviation sector, it would lead to more competition and more competitive fares, Gopinath said.
Today, airport charges are almost equal to a budget airline's fares, Gopinath said, adding that, "It is a kind of airport monopoly." The air-carriers' decision to levy a heavy fuel surcharge on passengers has only resulted in decline in passengers demand, Gopinath said.
"They (airline operators) have fixed the prices. They are fortunate that there is no competition law in the country. Fuel surcharge has stopped growth and the airlines' losses have also increased because a sizeable chunk of travellers can't afford those prices," he said.
Today, only four per cent of the country's population travel by air and there is only 50 per cent occupancy (in aircraft), that too in peak seasons. It means only 50 per cent travellers can afford to fly, he said. The Government would also have to look into other issues like taxation, etc, he said, adding, "ATF prices in India are 60 per cent higher than the rest of the world. These taxes are needed to be lowered to stimulate demand."
