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Industry welcomes tax cut on turbine fuel

THIRUVANANTHAPURAM: The budget proposal to reduce the tax on aviation turbine fuel (ATF) to four per cent is the fulfilment of a long-pending demand of the aviation, tourism and hospitality industries in the State.

The high rate of tax was one of the main reasons for the high airfare from major metropolitan cities to the airports in the State. Moreover, it was also a major stumbling block for many domestic carriers, including low-cost ones, to commence services to the airports in the State.

Although the State had emerged as a major tourist destination, the lack of air connectivity and convenient flights were a major concern among stake-holders of these industries. The commencement of flights by low-cost carriers had not helped tourist inflow.

The high airfare in the domestic sector forced many to opt for attractive tour packages to visit foreign countries. For those in many parts of India, going to Singapore and Malaysia on a weekly tour package works out cheaper than opting for a holiday to a destination in the State.

Finance Minister T.M. Thomas Isaac said many States had already reduced the tax on ATF to four per cent and that the State government was also doing so. He hoped that the airline companies would pass on the benefits to the passengers.

At present, the State had one of the highest tax rates on ATF among the States in the country. Airline sources said there was no tax on ATF used by international carriers operating to the State.

Sources in the Board of Airline Representatives (BAR) welcomed the budget proposal. “With the prices of ATF going up globally, it is unlikely that the benefits of reduction are passed on to the passengers,” sources said.

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