As Indian carriers protest the proposed hike in service tax on air travel, global airlines body IATA has said such taxes would compromise the industry’s ability to maintain margins in the wake of rising fuel prices. In the last few weeks, additional taxes have been proposed on air travel in India, South Africa and Iceland, while new and increased taxes of 3-5 per cent of ticket prices were imposed in the UK, Germany and Austria last year, the International Air Transport Association (IATA) has said.

“This is a price-sensitive business. Aviation has the power to stimulate economies. But that ability is being compromised by adding taxes at a time when we are struggling to cope with high fuel prices just to maintain anaemic margins,” IATA Director General Giovanni Bisignani said.

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