Taxes and red tape threaten to hold back Indian aviation, says Iata chief

India’s strong economy and expanding middle class help to make the country one of the fastest-growing aviation markets in the world.

Tony Tyler, the director general and chief executive of the International Air Travel Association (Iata) said that India could potentially become the third-largest aviation market in the world by 2029.Show more

Heavy taxation and other burdensome regulations could stifle India’s aviation sector, the chief of the global airline industry’s trade body said yesterday.

Speaking in the capital New Delhi, Tony Tyler, the director general and chief executive of the International Air Travel Association (Iata) said that India could potentially become the third-largest aviation market in the world by 2029. This is when the annual number of travellers to, from, and within India is forecast to hit the 280 million mark.

Although aviation contributes US$23 billion to India’s GDP and supports about 7 million jobs, there are challenges that could prevent the sector from reaching its full potential, Mr Tyler said.

“While demand growth is robust and some airlines are generating profit, sector-wide losses for India are still expected to exceed $1bn this year,” he said. “Onerous regulation and processes, debilitating taxes and expensive infrastructure are holding back the industry’s ability to deliver greater economic benefits.”

Mr Tyler also issued a warning over the heavy state taxes on jet fuel, which is as high as 30 per cent in some regions of the country. He called for the Indian government to liberalise the market.

“Regulation is also holding back the development of the sector,” said Mr Tyler. “Well-intentioned regulations, but which are inconsistent with global standards, make doing business in India very difficult for the airlines. India imposes rules and requirements that are not seen anywhere else.”

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