India’s ambition to become a global aviation hub could take a hit unless it brings clarity and consistency to its taxation framework, Willie Walsh, director general of the International Air Transport Association (IATA), said on Tuesday.
Speaking on the sidelines of an IATA event held in India after 42 years, Walsh said taxation has long been an obstacle in airline operations and remains one of the biggest challenges to growth.
“When we talk about India, taxation is always one of the items on the agenda,” he said. “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 said the solution does not lie in eliminating taxes altogether, but in creating a more predictable and transparent framework.
“What’s needed is a clearer understanding of how taxation rules apply,” he said. “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 cases, Walsh noted, these disputes are eventually resolved in favour of the airlines, but “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 wants to tap into its vast aviation potential, providing regulatory and fiscal stability will be essential.
“Greater certainty around taxation is critical for India to fully exploit the massive opportunity that exists in aviation,” he said.
Beyond taxation, Walsh also highlighted ongoing friction between airlines and airport operators, and said that lack of coordination often leads to inefficient and overly expensive airport infrastructure. “People think we’re in the same industry, but we are not. We have aligned interests, but fundamentally different financial structures,” he said.
“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 said.
He further called for a shift toward stronger collaboration between the two sectors. “Where airports and airlines work together, the results are incredibly effective,” the IATA chief said.
