The airline industry has slammed the decision to raise GST on premium economy and business class air travel, which has been raised from 12% to 18% as “disappointing”
“This increase runs counter to the efforts of Indian carriers, which have been investing in their premium products to enhance the travel experience on their flights,” said Regional Vice President, Asia Pacific, International Air Transport Association (IATA) in a press statement.
IATA added that tax on non-economy air travel has risen dramatically over the years from an 8.6% rate in 2017 under the service tax regime, to now 18% GST after the announcement on Wednesday (September 3, 2025).
“For its aviation industry to thrive, India needs to take a whole of government approach in considering broader policy and consider the risks of such policies on dampening demand and undermining profitability. Asia Pacific airlines are forecast to only earn $2.60 per passenger in 2025. Taxing premium travellers, where these customers often make a difference to a route’s viability, is counterproductive,” the statement added.
