IATA seeks "abated" rate of GST on flights after finding tax burden very high

Global airlines' body IATA has sought an "abated" rate of Goods and Service Tax (GST) on flight tickets, saying the tax burden on the aviation sector was already high and the GST regime should conform to global standards and principles. Maintaining that the International Air Transport Association (IATA) has been "working closely" with GST Secretariat in New Delhi to address some issues of concern to airlines, its chief Alexandre de Juniac said "the GST regime needs to adhere to international standards and principles."

"We have called for a zero-rating for international flights when the GST comes into effect next April. This seems unlikely. To limit its damage to the sector's competitiveness, we would at least hope for an abatement in the rate," de Juniac told reporters in New Delhi. He said the airlines in India faced "an onerous tax burden, including the imposition of service tax to services rendered abroad, including those for overflight charges, global distribution systems and international tickets." This, he said, was "in contravention of international principles established by governments" through the UN body International Civil Aviation Organisation (ICAO).

The IATA Director General and CEO, who met top officials of the government and Indian carriers during his two-day visit here, said he had shared these and other concerns with the government. Besides GST, the concerns included "high" tax on aviation fuel charged by states, the service tax on air tickets and exorbitant airport charges. On privatisation of major Indian airports, he acknowledged that the awarding of airport concessions has contributed to the development of India's airport infrastructure.

However, "while the passenger experience has improved, the impact for airlines has been far less positive," he said. Asserting that IATA "does not support privatisation of airports, nor are we officially opposed to it", de Juniac said looking at the experience in this regard in India and other countries, "I am hard pressed to find an example where the results, overall, have been positive. A private sector mindset can add value to airport projects with efficiency, cost effectiveness, entrepreneurial spirit, and so on. But we need a stronger regulatory framework than exists today to ensure that there is a balance struck between commercial and national interests," he said. 

Quoting data, de Juniac said the airlines operating in India have faced huge cost increases. "This is in part due to the up to 46 % concession fee that the private airport operators have to pay to the government," the IATA chief said. "At the same time, the Airport Economic Regulatory Authority has been unable to preserve its independence sufficiently and has not been able to implement its own tariff orders, such as the one to reduce Delhi's charges" by over 80%, he said.

Noting that while there was "no turning back" to the public-private partnership at Indian airports now, he said "what can be done is to strengthen the regulatory structure for the airports already privatised in order to defend public interest." He said air transport contributed "enormous value" to India by stimulating growth and development with increasingly accessible air connectivity. "India's air transport industry has been through tough times. While many Indian airlines are now posting profits, the sector is still in loss territory with many challenges. These include a massive debt burden, onerous regulations, expensive airport infrastructure and high taxes. "Addressing these will bring huge social and economic benefits to India," de Juniac said.