Oxidizes toluene and xylenes to (methyl)benzyl alcohols. The enzyme has a broad specificity and also oxidizes (methyl)benzyl alcohols to (methyl)benzaldehydes and indole to indoxyl. Binds 2 Fe(3+) ions per subunit. Composed of two subunits: XylA and XylM. Belongs to the fatty acid desaturase type 1 family. AlkB subfamily.