Airfare hike on hold as govt defers service tax plan

Mumbai: The Centre has delayed the decision to impose 12% service tax on economy class fares from April 1, as proposed in the Budget 2010-11. Airline operators say a fare hike, if it comes along, could be effective only from June 1, as per government orders.
Currently, service tax is levied on only business class fares. Domestic airlines are expected to raise economy class fares by Rs 400-480 per ticket if the imposition of service tax on the base fare becomes applicable from June 1.
However, airlines have requested the aviation ministry for a roll back of service tax.
Despite the cost of aviation turbine fuel (ATF) being hiked for the third time in a row, airlines are in no mood to hike air fares. Travel agents say that compared to last year's summer season, fares have peaked by over 32% and airlines will not pass on the burden to travellers even in the upcoming summer season. However, there might be a slight upward movement in fares but not to a noticeable limit.
A Jet Airways spokesperson said that the airline will not hike fares as of now. Also, there is no news of fare hikes from rivals Kingfisher and Air India too. Even low-cost carriers like SpiceJet and Indigo have not announced a fare revision, despite the holiday season being around the corner.
03/04/10 Shaheen Mansuri/Financial Express

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

Categories: Indian Aviation- In General Apr 2010