India a fantastic market, but high taxation can slow down growth: IATA Chief Willie Walsh

Rio de Janeiro, Jun 8 (PTI): India is a fantastic market that demonstrates the real value of aviation, but high fuel costs is a challenge for the local airlines, IATA chief and IndiGo's incoming CEO Willie Walsh said on Monda.

India a fantastic market, but high taxation can slow down growth: IATA Chief Willie Walsh

Rio de Janeiro, Jun 8 (PTI): India is a fantastic market that demonstrates the real value of aviation, but high fuel costs is a challenge for the local airlines, IATA chief and IndiGo's incoming CEO Willie Walsh said on Monday.

Speaking at briefings after the conclusion of the IATA Annual General Meeting (AGM) in the city, Walsh said India has great opportunities, as well as some as challenges. Howeever, taxation could slow down the growth potential, he added.

"The net position in India is very, very exciting and that is proven by the growth that we've seen in the domestic market... I think (there) would be a very significant growth in the international market in due course as well," he said.

The International Air Transport Association (IATA) is a grouping of more than 370 airlines and accounts for around 85 per cent of the global air traffic.

Talking about the challenges in the Indian market, Walsh cited high fuel costs.

"That is an additional burden when fuel (price) is denominated in dollars and you've seen that the rupee has certainly lost value against the dollar in recent years," he said.

Responding to a question at one of the briefings from PTI about the regulatory and taxation system in India, Walsh said he thinks that the country's high taxation is going to slow down the potential growth of the market without question.

"If you have a more business-friendly environment where you want to see stronger growth, which I think India needs, then you have to look carefully at what your tax rate is," he said.

According to him, the positive has been the way the government has responded to the fuel tax.

In the wake of the surging fuel costs due to the West Asia crisis, some states in India have reduced the value added tax on jet fuel, which accounts for over 40 per cent of a carrier's operational expenses.

"It seems somewhat strange that it's cheaper to fly internationally than domestically because of the domestic fuel tax in India, but the government has taken measures to dampen that impact, which I think is absolutely the right thing to do," Walsh said.

With respect to India, he also mentioned the investments in the airport infrastructure, saying it would facilitate growth.

The incoming IndiGo CEO noted that deliveries of aircraft are suffering due to supply chain issues and that the some of the airline's planes are grounded due to engine issues, which is also resulting in higher maintenance charges.

"I see these to some degree as being reasonably short-term challenges suffered by everybody," he said.

Walsh, an aviation veteran who took over as the IATA director general in April 2021, will soon be taking over as the CEO of IndiGo.

"I wouldn't be going to IndiGo and India if I didn't think India was a fantastic and exciting market.

"Those of you who have heard me speak in the last two years, I have consistently highlighted that India is a market that has huge potential and demonstrated the real value of aviation," Walsh said.

India is one of the world's fastest growing civil aviation markets, and IndiGo is the country's largest airline with a domestic market share of 65 per cent.

For India to fulfil its economic ambition, Walsh said, it can be achieved only through greater air connectivity, both domestic and international.

India has a fantastic population, a government focused on economic growth, and they value the contribution of aviation, he said.

"The opportunities are huge, and I look forward to playing a part in the future for the development of the industry in India," Walsh said.

On March 31, IndiGo announced the appointment of Walsh as its next CEO.

The announcement came less than three weeks after the sudden exit of Pieter Elbers as the CEO against the backdrop of massive operational disruptions at the airline in December last year. PTI RAM PRK

(This story is published as part of the auto-generated syndicate wire feed. No editing has been done in the headline or the body by ABP Live.)