KOCHI: Even as Prime Minister Narendra Modi is pushing for economic reforms, sale proceeds of air tickets to the tune of $16 billion a week are being routed through Deutsche Bank. This happens at a time when nationalised banks are eyeing a big slice of the burgeoning aviation market pie.
A memorandum forwarded by Public Accounts Committee chairman K V Thomas to the Reserve Bank of India says nationalised banks are mute witnesses to the big volume of aviation business being handled by the foreign bank. To an RTI query about the average weekly turnover of Deutsche Bank, the RBI said it did not have any information. The percentage of handling charges levied by the foreign bank for processing the colossal figure is also not known.
Travel agents had been making cheque payments to International Air Transport Association (IATA) till 2016. The enormity of the transaction with Deutsche Bank came to light after agents were instructed to make direct payments to the bank last year.
“I have forwarded the memorandum to RBI Governor Urjit Patel and he has promised to look into the matter seriously,” Thomas told The Sunday Standard. “He said it assumes great significance considering the country is set to become the third largest aviation market within a few years with its current size estimated to run into trillions of rupees.”
The memorandum submitted by the IATA Agents Association of India says tickets are being sold through accredited travel agents. IATA collects the money every week using the Bank Settlement Plan and routes it through Deutsche Bank AG offices. The IATA clearing house apportions the amount based on sales reports. Even Air India and Jet Airways receive payments from IATA. The proceeds from ticket sales go to the foreign bank before reaching IATA.
Other charges such as user development fee and airport, governmental taxes (including service and sales levies) and fuel surcharges are part of this transaction. The fuel surcharge collected under IATA Tax code ‘YQ’ and ‘YR’ forms the major chunk of tariff. But it goes directly to the airline’s kitty without taxation, says association president Biji Eapen.