Airlines to pass on new burden to travellers

Mumbai: Air travel is likely to become more expensive as domestic carriers deal with the double blow of an expanded service tax regime and a levy on crude imports from 1 April.
Finance minister Pranab Mukherjee’s Budget for 2010-11 has proposed a 5% customs duty on crude petroleum, up from zero until now. This will make aviation turbine fuel (ATF), which accounts for almost 40% of an airline’s operating costs, pricier.
Service tax on air travel is also being expanded to include domestic travel, and international flights in any class; it was earlier applicable only to international first and business class travel.
Airlines, which had been hoping for lower sales tax on ATF across states and special concession for midsize planes in the Budget, will now pass on these new expenses to the travellers.
“This is an inclusive Budget with special focus on infrastructure...but as far as aviation is concerned, there has been no major announcement in terms of concessions,” said M. Thiagarajan, managing director at Paramount Airways Ltd.
The levy on crude imports and service tax on domestic travel “will only increase the air fares”, he said. Aloke Bajpai, chief executive of travel website IXiGO.com, said there was little for airlines to rejoice about.
28/02/10 P.R. Sanjai/Live Mint

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Categories: Indian Aviation- In General Mar 2010