India's Service Tax on air travel breaches international obligations – IATA chief
“Taxing overflight charges breaches India's international obligations under the Chicago Convention. Imposing it on premium class tickets and landing charges is contrary to ICAO Council Resolution 8632 which calls for a reduction in such taxes. India is a long-standing membership on the ICAO Council. Not following ICAO policies is disappointing and an embarrassment”, said Giovanni Bisignani , Director General and CEO of the International Air Transport Association (IATA), which represents some 230 airlines comprising 93% of scheduled international air traffic.
Apart from the tax problem, he highlighted some of the aviation problems of India.
Indian carriers could post US$ 1.5 billion in losses in 2008, the largest outside the US.
India is among the most expensive places on the planet to buy aviation turbine fuel (ATF). In August, it was 58% more expensive to buy fuel in Mumbai (for domestic flights) than in Singapore (for international). Excise duties, throughput fees charged by airport operators and state taxes of up to 30% for domestic flights result in a cost structure that cannot support a competitive industry.
Mumbai needs an airport that can adequately serve the financial capital of the world's second most populous nation. That means thinking much, much bigger. We must use the breathing space of the current downturn to plan for capacity in the 100 million passenger range for Mumbai, like airports in Delhi, Seoul, Hong Kong, Dubai and other important cities.
I am an India optimist, but my biggest concern is speed. Aviation is a fast-changing industry that is fuelling much of the Indian economic success story. But the crisis is highlighting that India's decision making is too slow.