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Walsh mentioned the answer doesn’t lie in eliminating taxes altogether, however in making a extra predictable and clear framework.
Willie Walsh, director common of the International Air Transport Association in New Delhi. (Reuters)
Speaking on the sidelines of an IATA occasion held in India after 42 years, Walsh mentioned taxation has lengthy been an impediment in airline operations and stays one of many largest challenges to development.
“When we talk about India, taxation is always one of the items on the agenda,” he mentioned. “India has a very complex tax system, and it’s been a feature of our industry for many years; it’s not a new issue.”
Walsh mentioned the answer doesn’t lie in eliminating taxes altogether, however in making a extra predictable and clear framework.
“What’s needed is a clearer understanding of how taxation rules apply,” he mentioned. “What a lot of airlines believe happens is that you get a new interpretation of an existing rule that’s completely different from how it was interpreted previously. That leads to claims for unpaid taxes, followed by years of litigation.”
In many circumstances, Walsh famous, these disputes are ultimately resolved in favour of the airways, however “the damage is already done”. “You go through years of legal wrangling, and even if the airline wins, the uncertainty and financial strain take a toll. That’s not what anybody wants.”
The IATA chief emphasised that if India needs to faucet into its huge aviation potential, offering regulatory and monetary stability might be important.
“Greater certainty around taxation is critical for India to fully exploit the massive opportunity that exists in aviation,” he mentioned.
Beyond taxation, Walsh additionally highlighted ongoing friction between airways and airport operators, and mentioned that lack of coordination usually results in inefficient and overly costly airport infrastructure. “People think we’re in the same industry, but we are not. We have aligned interests, but fundamentally different financial structures,” he mentioned.
“We want efficient, cost-effective airport operations. But what we often get are developments that are not appropriate for airlines or are more expensive than necessary,” Walsh mentioned.
He additional referred to as for a shift towards stronger collaboration between the 2 sectors. “Where airports and airlines work together, the results are incredibly effective,” the IATA chief mentioned.
