India a ‘fantastic market’ for aviation, but fuel costs remain a challenge: IATA Chief – Firstpost

India has emerged as one of the world’s most promising aviation markets, but persistently high fuel costs continue to weigh on the country’s airlines, International Air Transport Association (IATA) Director General Willie Walsh said.

Speaking after the conclusion of the IATA Annual General Meeting (AGM) in Rio de Janeiro, Walsh described India as a “fantastic and exciting market” with enormous growth potential, while cautioning that elevated fuel prices and taxation remain significant hurdles for carriers operating in the country.

“I wouldn’t be going to IndiGo and India if I didn’t think India was a fantastic and exciting market,” Walsh told reporters.

The aviation veteran, who has led IATA since April 2021 and is set to become the chief executive officer of IndiGo later this year, said India has consistently demonstrated the transformative role aviation can play in supporting economic growth and connectivity.

“India is a market that has huge potential and has demonstrated the real value of aviation,” he said.

India is currently one of the fastest-growing aviation markets globally, driven by rising incomes, increasing air travel demand and expanding airport infrastructure. The country’s domestic aviation sector has witnessed robust growth over the past decade, with low-cost carriers leading the expansion.

However, Walsh noted that fuel costs remain a structural challenge for Indian airlines.

“I think the challenge again in India is high fuel costs. That is an additional burden when fuel prices are denominated in dollars and you’ve seen that the rupee has certainly lost value against the dollar in recent years,” he said.

Aviation turbine fuel (ATF) accounts for a significant portion of airline operating expenses in India and is subject to state-level taxes, making it among the costliest aviation fuel markets globally. Industry executives have long argued that high fuel taxes reduce profitability and limit airlines’ ability to expand operations.

Walsh also suggested that taxation policies could potentially slow the industry’s growth trajectory if left unaddressed.

Despite these challenges, he expressed confidence in the long-term prospects of the Indian aviation sector, citing strong government support for economic development and growing demand for air travel.
“The net position in India is very, very exciting and that is proven by the growth that we’ve seen in the domestic market,” he said.

Walsh added that India is likely to witness substantial expansion in international air travel in the coming years as airlines add capacity and connectivity improves.

“I think there will be very significant growth in the international market in due course as well,” he said.

According to Walsh, enhanced air connectivity will be critical if India is to achieve its broader economic ambitions.

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

India’s aviation market has attracted growing global attention amid strong passenger traffic growth and large aircraft orders by domestic carriers. IndiGo, the country’s largest airline, currently commands around 65 per cent of the domestic market and is pursuing an aggressive international expansion strategy.

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

His remarks come ahead of his transition to IndiGo, announced in March, following the departure of former CEO Pieter Elbers. Walsh’s move places one of the aviation industry’s most influential figures at the helm of India’s dominant airline at a time when the country’s aviation sector is entering a new phase of growth.

With inputs from agencies.