The increasing interest of international airlines like Etihad, AirAsia and Singapore Airlines into the Indian passenger carriers signals renewed confidence in the sector, says Civil Aviation Minister Ajit Singh.
"All airlines-Etihad, AirAsia, Singapore Airlines-are the biggest and most professional companies in the aviation business. If they are interested in India, this shows a renewed confidence in the sector," Singh told IANS in an interview.
"In the long run, there is tremendous potential in the sector to grow."
He said the cabinet approval for the Jet-Etihad deal last Thursday was a positive move, which will help the industry, bogged down by heavy fuel and interest costs.
"The alliance between Jet-Etihad is positive for the industry. It will ultimately benefit the passengers and boost the sector further."
"This will open possibilities of India becoming a hub for international travel. With projections showing a very rapid growth in passenger numbers and favourable geographic location, India requires more alliances for servicing passengers needs."
Recently, Singapore Airlines announced that it will set up a full-service passenger carrier in India in collaboration with the Tata Group.
Commenting on this, Singh said: "The industry requires more players and especially those with deep pockets as this is a capital intensive industry."
"International, experienced companies like Singapore Airlines entering the market is also a positive development."
Soon to enter the Indian skies is Malaysian low-cost carrier AirAsia, which will start a budget airline based in Chennai.
On high jet fuel taxes which is the main cause for the domestic airlines' financial woes, the minister said the centre is trying to get the fuel as a notified category item.
"We are looking into the matter as fuel constitutes nearly 50 percent of (airline) cost. We have also asked the states to cut the taxes on jet fuel."
Fuel prices comprise about 50 percent of the operating costs of airlines in India and have dented the sector as most airlines bleed under the high state sales tax regime.
The high state taxes are a legacy of a long-standing perception that jet fuel, which is a super-refined form of kerosene, should not be subsidised for air travel.
However, the Indian government continues to subsidise sensitive products like diesel, LPG (liquefied petroleum gas) cylinders and kerosene.
Currently, jet fuel sold in the country is nearly 50-60 percent costlier than in overseas markets like Bangkok, Singapore and Dubai, as an additional 4-34 percent state sales tax hikes its price.