IATA chief slams Indian aviation policy as illegal, illogical

The head of the International Air Transport Association today termed the service tax levied on air travel in India as "illegal", and said there was a disconnect between various ministries on aviation issues which was "embarrassing" India globally.

Addressing a CII conference in New Delhi, Giovanni Bisignani, chief executive of the global aviation body, said, "The disconnect between the finance ministry and the civil aviation ministry has put India in an embarrassing position.

It is not following the rules that it helped to create."
Bisignani added, ''A coordinated policy approach among ministries is urgently needed. Efforts to reduce the high cost of Indian aviation illustrate how this is not happening.''

Since 2006, the finance ministry has imposed a 10.3 per cent service tax on international first- and business-class tickets. ''Such taxes are illegal by International Civil Aviation Organization's rules,'' he said. ''In February, the minister of finance announced the extension of the tax to economy and domestic tickets.''

''The disconnect between the ministry of finance and the ministry of civil aviation has put India in an embarrassing position. It's not following the rules it helped to create.''

Bisignani also said the government collected $34 million in aviation fuel sales tax between 1994 and 2001. "Eight years after a parliamentary act made it (the tax) illegal, and despite the efforts of (civil aviation) minister Praful Patel, the finance ministry has not complied and airlines are still waiting for the cash.''