GST impact: International Flight ticket buyers, you may be paying more for flying abroad

International Air Transport Association (IATA) chief Alexandre de Juniac said that the government's policies are imposing "excessive costs" on airlines in India and infrastructure constraints are limiting growth.

Aviation Turbine Fuel (ATF) is a very large revenue generator for states. Image: Reuters

People from India travelling are paying more on their international flight tickets, blame GST. On Tuesday, International Air Transport Association (IATA) chief Alexandre de Juniac said that the government's policies are imposing "excessive costs" on airlines in India and infrastructure constraints are limiting growth. News agency PTI reported the IATA chief as saying in New Delhi that the country's aviation sector to register 500 million passengers by 2037. However, he flagged various concerns about the Indian aviation sector

de Juniac said that levying the Goods and Services Tax (GST) on international air tickets violates ICAO principles. IATA is a grouping of over 280 airlines. Air India, Jet Airways and Vistara are also IATA members. He further said that the steep rise in fuel prices and fall in the rupee value are putting "acute pressure on profits" of airlines.

"If we can comprehensively fix jet fuel and infrastructure issues, India will be primed to take a giant step forward in the world of aviation," PTI quoted him as saying at a conference in Delhi.

"We have long made our case that applying GST to international tickets violates ICAO principles and India's international obligations," de Juniac added while warning that deviations from global standards may have a short-term revenue benefit for the government but it weakens India's competitiveness by raising the cost of connectivity.

The government presently levies 5 per cent and 12 per cent Goods and Services Tax (GST) on the economy and business class air tickets, respectively. Fuel accounts for about 24.2 per cent of an average airline's cost structure, the IATA chief said. But in India, it is 34 per cent, said de Juniac while pitching for regulating "transparency in pricing of jet fuel".

"All airlines are suffering from the rise in fuel prices. And India's regulatory and tax framework around fuel hits airlines serving this market even harder," he said.

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The government is mulling to bring jet fuel under the GST. But for this, Minister of State for Civil Aviation Jayant Sinha said complicated federal issues have to be sorted out.

Aviation Turbine Fuel (ATF) is a very large revenue generator for states.

(With PTI inputs)

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