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IATA Criticizes Indian Aviation Tax

by Mary Swire,, Hong Kong

29 September 2010

It is "critical" that the costs of operating an airlines in India are reduced if the country's aviation industry is to remain competitive, according to the International Air Transport Association (IATA).

IATA says that India's Ministry of Finance has added USD236m to the cost of operating in India with its decision to extend the 10.3% service tax from international premium tickets to economy and domestic travel, in contravention of International Civil Aviation Organization (ICAO) rules.

“It is an embarrassing situation for such a relevant country as India — which is a member of the ICAO Council — to be ignoring rules that it has helped to develop,” said Giovanni Bisignani, IATA’s Director General and CEO at an industry dialogue hosted by the Confederation of Indian Industry in New Delhi.

IATA notes, however, that AERA — the airports regulator — has set a "positive precedent" by upholding ICAO principles and disallowing automatic cost increases for the airports in Delhi and Mumbai.

"It’s time for a comprehensive approach with a common vision by all involved,” Bisignani remarked.

"India is more connected than ever to our globalized world, bringing enormous economic benefits. This has challenged all those involved in India’s aviation industry to improve competitiveness. In recent years, there have been some great improvements. But there is still much more to be done."

TAGS: tax | business | sales tax | India | law | aviation | standards

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