The Hindu Business Line : Tax sops to boost aviation industry

THE travel industry has welcomed the Finance Ministry's concessions for the aviation industry, estimating that the reduction in the excise duty on air turbine fuel (ATF) and abolition of the 15 per cent inland air travel tax (IATT), would lower domestic air travel cost by around 20 per cent.

More importantly, they say the measures indicated that tourism was being recognised as an important contributor to the exchequer.

Mr Ashwini Kakkar, Chief Executive Officer and Managing Director, Thomas Cook (India) Ltd, said: "The incentives provided for civil aviation augur well for the travel and tourism industry. Efforts made by various organisations and trade bodies are bearing fruits. These steps will positively affect air seat pricing and lead to a surge in domestic air travel not only within the commerce and business realm but also on the individual travel front.

"Overall it speaks of the travel and tourism industry being recognised as a vital contributor to the exchequer of the nation, which is ready to integrate into a global market."

Mr Ranjit Malkani, CEO, Kuoni Travel Group, India, said the decision to slash excise duty on ATF and abolish IATT would translate into lower airfares, making air travel more affordable for the middle-class.

The measures would provide a big boost to the domestic travel industry with some travellers making a shift from railways to airlines. This would also contribute to an increase in domestic tourism, especially to popular destinations such as Goa, Kerala and Rajasthan. As far as business travel was concerned, while lower airfares would result in decreased turnovers, the overall market would grow leading to a rise in total transactions.

Mr Ankur Bhatia, Managing Director, Amadeus, India sub-continent, said by doing away with IATT, airfares would drop by 12-13 per cent. Further, if a reduction in the excise duty on ATF was implemented, it would further reduce operating costs of the airlines by another 5 per cent. In all, he saw a reduction of 15-20 per cent in airfares.

He added that it would be interesting to see if the airlines passed on the saving to the traveller. If so, it would boost air travel and lure the rail passenger.

The announcements would drive even higher growth in domestic air travel, which recorded double digit growth last year.

Mr Lalit Sheth, CMD, Raj Travels, estimated air travel, business and leisure included, would record 30 per cent growth following the tax incentives announced. Good days were ahead for all the three domestic airlines, through an increase in leisure travel by Indians and foreign tourists in India. He saw corporate travel increasing, with sales teams becoming more mobile, spurring the economy. These would add to the feel-good factor for which the Finance Minister and the Prime Minsiter should be congratulated, he said.

According to Mr Jehangir N. Katgara, President, the Travel Agents Association of India (TAAI), any cut in travel tax, if passed on to the consumer, would stimulate tourism, both domestic and international. According to Mr Gulu Jagtiani of TAAI, the decision to abolish IATT and halve excise on ATF would boost domestic travel by air. With earnings on the domestic business increasing as opposed to that on international business, the company had increased its domestic corporate accounts by 60-70 per cent over the past year, he said.