IATA has called for the development of a comprehensive aviation policy aligned with the Indian government’s stated intention to make it easier to do business in India.
“Onerous regulation and processes, debilitating taxes and expensive infrastructure are holding back the industry’s ability to deliver greater economic benefits to India,” said Tony Tyler, IATA’s director general and CEO.
Delivering a keynote address at the Aviation Day India organised by IATA together with India’s Ministry of Civil Aviation (MoCA) and the Confederation of Indian Industry, Tyler highlighted three areas where work is needed to reduce costs in India.
Firstly, India needs to reduce its tax burden. It should not apply service tax to services rendered outside of India, including those for global distribution systems, extra baggage fees and international tickets. Also, the incoming GST regime should protect airlines from double taxation on income.
Next, fuel needs to be priced competitively. As state taxes on jet fuel can be as high as 30 per cent, Tyler urged the government to grant “declared goods” status for jet fuel which would limit taxation.
Lastly, India should allow the Airports Economic Regulatory Authority (AERA) to do its work independently. For example, India needs to overcome legal challenges that prevent AERA’s recommendation for a 78 per cent reduction in Delhi’s airport charges from being implemented.
Tyler also pointed out that Indian regulation is out-of-step with global standards and best practices, holding back the development of the sector.
Instead, India needs “smarter regulation” that can address real issues, meet the public interest, be consistent with global standards and be implemented efficiently.