Air travel to cost more soon

The restoration of 5 per cent excise duty on the import of crude oil will result in a rise in air fares soon. In June 2008, the government fully exempted basic customs duty on crude petroleum when the price of the Indian crude basket reached a high of $112 per barrel.
Also, increasing the ambit of service tax to domestic travel would lead to a 10 per cent rise in fares. Earlier, it was charged only from the first and business class travellers on international routes.
Sources in the oil companies say that the restoration of 5 per cent excise duty will on an average lead to a hike of Rs 1,400 per kilo litre of aviation transport fuel (ATF). Its prices in Delhi and Mumbai are Rs 37,982.22 and Rs 39,166.64 per kilo litre, respectively.
In the domestic sector, jet fuel accounts for around 40 per cent of the total operating cost compared with 22 per cent in the international sector.
“Airlines cannot absorb this huge hike in jet fuel prices, and since the passenger numbers are good, it will be passed on to consumers leading to a rise in airfares,” said Raajeev Batra, executive director at KPMG, a financial advisory firm.
Airlines have already petitioned the government to rationalise sales tax on ATF, which varies from 4 per cent to 30 per cent across different states in the country.
27/02/10 Business Standard

To Read the News in full at Source, Click the Headline

Categories: Indian Aviation- In General Feb 2010