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Wednesday, 12 June, 2019, 10 : 44 AM [IST]

Verdict 2019 - A Confidence Booster For Travel Industry

The benchmark Sensex and Nifty surged with the news of the national leadership retaining power with absolute majority and the same robust sentiment is evident among travel stakeholders who believe that the continuity factor should empower the government to address and materialise the long-standing plans to turnaround the fortunes of the industry.Samruddhi Chitnis and Disha Shah Ghosh spoke to a cross section of players who believe that the next five years are crucial for the government to demonstrate their intent to provide adequate support on ground to realise the potential of the travel, tourism and aviation sectors and give a major push to the economy at large.

Ajay Singh, Chairman and Managing Director, SpiceJet

This is a mandate to build a strong, proud and prosperous India. India must grow at 10% for the next 10 years and this government will ensure that we shed the tag of a ‘developing’ country and proudly take our place in the big league of economic superpowers. The election verdict is a big win for India and its 1.3 billion people.

India’s aviation sector has witnessed remarkable growth in the last five years and I am confident that we will continue to be the fastest growing aviation market in the world. We hope that our government will address the structural challenges facing the sector urgently. If this is done, there is no doubt that Indian carriers will become leading global players and India, a global aviation hub that surpasses Dubai, Abu Dhabi and Singapore.

Peter Kerkar, Group CEO, Cox & Kings Ltd.

Tourism contributes over 9% to the GDP annually for the country and this has had a multiplier effect on both development and job creation. The new government should increase its focus on tourism and speed up tourism projects in destinations that have the carrying capacity to absorb tourists in large numbers. Last mile connectivity from major metros to tourism destinations will act as a catalyst to double our tourism numbers and thereby contribute to overall development.

Another major area that the government should focus on is to increase the air seat capacity to India as this is one major challenge that India tourism is facing when it comes to attracting more overseas visitors to India. On the domestic front, the UDAN scheme should be extended to more airports and help the private sector in making it viable. These steps should be taken up on priority by the new government.

E M Najeeb, Chairman and Managing Director, ATE Group of Companies & Sr. VP, IATO

Growth of travel, tourism, hospitality and aviation industries would be a priority of any forward-looking, progressive government. Supporting policies, due infrastructure development and industry partnering would flourish the industry. The government is getting into its second tenure. The first five years tourism and hospitality were included in the prioritised economic activities. That means during the last tenure the government was very much for the growth of tourism. An independent Minister was assigned for Tourism. With the same fervour and enthusiastic policies, when the government gets into its second tenure they are expected to be much more earnest about the growth of these segments. Then the tourism industry players in India will support and cooperate with all the good initiatives of the government.

At the same time we need to project a very positive and welcoming image of India to the tourism markets. Tourist fraternity should see India as a peaceful destination which is warm, welcoming, safe and tourism-friendly.

Rakshit Desai - Managing Director, FCM Travel Solutions, Indian Subsidiary of Flight Centre Travel Group

The continuity of the national leadership for the next five years promises stability to the travel & tourism industry. The government has taken various initiatives during its last tenure which have given a big boost to the travel industry. We are optimistic that the government will continue to provide support and impetus to the industry. One of the major factors that have always been an area of concern is the high price of ATF. ATF constitutes around 35% of the total operating costs of an airline in India, while globally it stands at about 25%. Such a wide global disparity in oil prices should be addressed. Back in 2014, when the government took charge, oil prices had slumped, but in the current scenario, the oil prices continue to rise.

Review of taxes is needed as GST on hotels varies according to room tariffs (18 % to 28%). Tax on premium hotels in India is amongst the highest in the world, higher than even in New York, London or Paris. The tax rate in other Asian countries such as Thailand, Singapore, Malaysia and China is much lower (6 % to 7%), putting the Indian hotels at a disadvantage when compared to its Asian peers. There is a greater need for the government and private sector to collaborate towards thematic development of the destinations, skilling of local communities and the conceptualisation and implementation of developmental initiatives.

Sharat Dhall, COO (B2C),

In order to see continued growth in the travel industry, we would like to see the government increase focus to improving the country’s infrastructure in the form of highways, rail networks and also a deepening of the air networks to smaller cities and tourist destinations. There is also a need for investment in marketing and promotion of heritage destinations of the country since they serve as a major tourist attraction for both domestic and international visitors. Development of airports in these regions and reasonable air fares are important to increase the tourist inflow to these locations. It would be a big boost to the airline industry if the tariffs on ATF were reduced so as to keep fares reasonable and drive passenger growth while ensuring the financial viability of the carriers. The travel industry is a big catalyst for jobs and has a multiplier effect on economic growth, and we are optimistic that the industry will continue to see buoyant growth driving overall economic growth in the country.

Kinjal Shah, Vice President & Co-Head, Corporate Sector Ratings, ICRA

A stable government is a positive from the point of view of decision-making. The government has already laid policies for the aviation sector like the National Civil Aviation Policy and the Regional Connectivity Scheme, with focus on the growth of the aviation sector. The major issue with the Indian aviation industry is the inability to pass on rising input costs to the customers due to intensive competition. ATF is the major cost for the airlines, comprising 30-40% of the total cost of the airlines, and is higher by ~45-50% in India as compared to international prices due to the high level of taxation. In order for the airlines to remain viable, the government should address India’s aviation infrastructure requirements and may need to have re-look at operating costs (like tax on ATF), which have constrained the performance of airlines.

Vishal Suri, Managing Director, SOTC Travel

We believe the biggest boost to growth and employment today will come from the services sector, especially the tourism industry. India is a large market for travel & tourism. With 70 airports at new locations and additional second airports; expansion of existing airfields, all developed under the UDAN scheme that aims at facilitating regional connectivity, will prove to be an impetus for the tourism industry.

With the new government, the need to lowering ATF pricing and strengthening infrastructure at tourism sites is of key importance. This will encourage travel and affordability. The government also needs to review the aviation policy and address the challenges especially bilateral policy and help create an ecosystem that recognises and supports the aviation industry’s viability. Rationalising the GST rate for hotels and incentivising the private sector will boost tourism since the sector holds huge potential for driving growth and generating employment.

Mahesh Iyer, Executive Director & CEO, Thomas Cook (India) Ltd.

With the travel industry being a crucial contributor to the Indian economy’s employment and growth curve, we are confident that the newly elected government will strengthen the industry with continuity of its tourism-friendly policies. We see the opportunity for increased focus on initiatives like UDAN aimed at enhancing the regional connectivity and affordable air travel, HRIDAY; integrated development of pilgrimage destinations through PRASAD, increased allocation towards enhancement of the e-Visa initiative to include additional countries, development of new tourism circuits and attractions for the inbound travellers, along with a strong focus on infrastructure.

Given the recent challenges faced by the aviation sector due to the withdrawal of Jet Airways and other challenges faced by Indian carriers, we believe there is an urgent need for a holistic view and corrective measures to be taken to revive the sector. This is crucial and in the interest of the larger travel, tourism, hospitality and business environment.

Our wish list also includes clarifying the issue of Air Travel Agent being subject to Tax Collection at Source. The amendment of the proviso to section 16(2) in claiming input tax credit on the tax charged by the airline will also help in providing a specific scenario of payment made by corporates or registered passengers to a travel operator. And finally for the FY 2019-20, we look forward to a reduced corporate tax structure of 25%.

Pradip Lulla, Vice President, TAFI

Progressive thinking is what the tourism sector needs. Jet Airways crises have not just affected credibility problems for the passengers, but for the travel agents as well. The government has to provide subsidies and support the infrastructure of airlines. Logically if airlines are unviable it will reduce inbound as well as outbound tourism.

It is time for the government to see the aviation sector differently. Subsidy to support is what the goal should be. Surge in airfares are parallel to the oil prices which ultimately if not given a strategic thought will only be eligible to top 20% of the population. Hence, aviation needs a fresh outlook.

PP Khanna, President, ADTOI

The tourism segment is not getting its due share all these years except for the government concentrating on the promotion of inbound tourism to bring more foreign tourists. However, not much has happened on the domestic tourism front which is growing at steadfast rate and bringing multiplier effect on the economy in terms of revenue generation and employment for states/UT. Government/corporate sector has to decide on this as soon as possible as air travel is witnessing tremendous growth.

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