Skift Take
Taxes on jet fuel are airlines’ single biggest cost, accounting for more than half the expenses for some Indian low-cost carriers. The aviation industry urgently needs relevant policy measures to address them now.
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India is a big potential market for aviation, but not a cheap one due to the high taxes, said International Air Transport Association’s (IATA) Director General Willie Walsh.
Aviation fuel in India is hit with the highest levels of taxes in the world. Airlines have been requesting that it be taxed the same as other goods and services. Vistara CEO Vinod Kannan told Skift earlier about the impact of high fuel costs, in addition to the depreciation of the Indian rupee. In March, the western state of Maharashtra reduced the value added tax on aviation turbine fuel from 25 percent to 18 percent at Mumbai, Pune and Raigad airports.
Walsh also noted that the Indian government’s policy that requires the use of sustainable aviation fuel can lead to higher prices. He also highlighted the scale of the economy and investments going into airports in India. In March, civil aviation minister Jyotiraditya Scindia announced that India would invest around $12 billion over the next two years in airports, aircraft and recruitment to meet the booming demand for air travel. Walsh a