Travelling by air could become dearer from April

Travelling by air could become dearer from April. This is due to the withdrawal of exemption on withholding tax of 12-15 per cent on lease rentals. In the last few budgets, airlines augmenting their fleets were given exemptions from this tax, which comes to an end on March 31, 2007. "This will push up lease rentals by 10-12 per cent," said Mohan Kumar, consultant for low-fare airline Air Deccan.
The withholding tax will hurt airlines that plan to lease more planes in the next couple of years. Indigo, for instance, plans to induct eight planes this year and eight in 2009.
The tax will severely hurt the state-owned carriers Air-India and Indian, which are adding many planes.
Airlines, which had sought rationalisation of taxes on aviation turbine fuel, are sore about the government not doing enough about the sector.
The helicopter companies like Global Vectra and Deccan Aviation, which offer charter services, will be hurt by the 7.12 per cent effective customs duty on the import of helicopters. This will force them to increase charter rates to companies like ONGC who use their services.
01/03/07 Ranju Sarkar & Lalatendu Mishra/Hindustan Times

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Categories: General Aviation Mar 2007