ATF 8 times costlier for domestic carriers: Assocham

New Delhi: Domestic aircraft operators pay over eight times higher taxes on Aviation Turbine Fuel (ATF) as these are charged with various tax levies, totaling 66% against 8% on international airlines that fill-in ATF in India and thus erode their annual profitability by 10.5% to 15%, according to a Paper brought out by Assocham on ‘Implications of Higher Tax Incidences on ATF for Domestic Flyers’.
Aircraft traffic in top tier cities in India has grown by 33% in 2005-06 and 14% in 2004-05. Most airports have recorded a growth of over 30% YoY in fiscal 2005-06. Modernization and expansion of the major airports of Delhi, Bombay, Chennai, Kolkata, Hyderabad and Bangalore are expected to facilitate further growth in traffic
“As a result of higher tax incidences on ATF for domestic carriers like sales tax, central excise, import duty and education cess which works out to be 66% as against 8% for overseas airlines, their adverse effect on profitability of full service carrier is estimated at 10.5%. However, on low cost carriers, ATF taxes burden on profitability is assessed around 15%”.
If the government reduces sales tax on ATF by about 10% and customs by 4-5% respectively, the domestic aircraft industry can save about Rs5000 crore of annual revenue on it and suitable utilise the amount for building airport infrastructure.
13/09/07 Livemint.com

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Categories: General Aviation Sep 2007