India’s proposal to auction air traffic rights could be anti-competitive and result in concentration of the market in a few powerful hands, global airlines body International Air Transport Association (IATA) warned on Thursday.
Emphasising that such a proposal, made in the draft civil aviation policy, has never been heard of before, IATADirector General Tony Tyler said the consequences of auctioning traffic rights would be very hard to predict.
Additionally, the IATA has flagged concerns about proposed 2% levy on air tickets to fund regional connectivity and the plan to use dual or multiple till for deciding airport charges, in the draft policy.
The Civil Aviation Ministry, which came out with the draft policy last October, is in advanced stages of finalising it after taking into account suggestions from the stakeholders.
About proposed auctioning of traffic rights, Tyler said he has never heard of it before, adding that it was something no country does.
“They (countries) don’t do it for very good reasons. If you auction traffic rights the consequences will be very hard to predict.
“One of them, I feel, would be the concentrating of the market in a few powerful hands. After all, the only people who will be able to afford to buy traffic rights will be the ones who are making lots of money already. So I think it could be a very anti-competitive move and it’s something that is really unprecedented in world aviation,” he said in a statement.
Noting that India is already a very expensive place to operate, Tyler said the proposed 2% levy for funding regional connectivity is going to add about $350 million additional costs annually for the local airlines.
“… Rest assured, in the end it is the airlines who are going to pay because of the competitive market, fares are set in the market, the amount the passenger pays is set in the market. So it’s going to be a real drain and a financial strain on the airlines in India,” he noted.