The airline industry on Wednesday welcomed the Delhi government's move to massively reduce the VAT (value added tax) on Air Turbine Fuel (ATF) from the existing 25 per cent to a mere 1 per cent.
The tax reduction will be applicable for flights destined to locations covered under the central government's Regional Connectivity Scheme (RCS) aimed at improving connectivity with remote areas, Delhi Finance Minister Manish Sisodia announced on Wednesday.
Presenting the Budget for the financial year 2017-18 in the Delhi assembly here, Sisodia, who is also the Deputy Chief Minister, said the move would give a boost to the civil aviation operators who have opted to ply flights on RCS routes involving Delhi.
Budget passenger carrier IndiGo's President and Whole-Time Director Aditya Ghosh welcomed the move and requested that the tax break should be broadened to include all outbound flights from Delhi.
"We do request that this tax break is broadened to all air travel out of Delhi as it will allow IndiGo to provide even more affordable air travel to millions of our customers out of Delhi which is our biggest base of airplanes," Ghosh said.
According to Ajay Singh, Chairman and Managing Director of SpiceJet, the airline supports the initiative that has the potential to reduce air fares.
"This is a welcome move, which will help reduce costs and, in turn, help bring down fares for flights to smaller airports in the country," Singh said.
Other industry stakeholders said that the move will reduce the cost of carriers by (approx) 10 per cent and bring down air fares on these routes resulting in a rise in travel on these sectors.
"This will further give a boost to the government's regional connectivity scheme, keeping the growth momentum going in the domestic air market," said Sharat Dhall, Chief Operating Officer (B2C), Yatra.com.
