Domestic and international air travel will become more expensive from April 1 this year. This follows the Finance Minister, Mr Pranab Mukherjee, revising the service tax on domestic air travel in economy class to Rs 150 from Rs 100 on domestic air travel and on economy class international air travel to Rs 750 from the existing Rs 500.

Domestic flights in business class will also become more expensive as Mr Mukherjee has proposed a 10 per cent service tax.

“The Budget does not augur well for the aviation sector. The price of aviation turbine fuel is rising which has forced airlines to hike fares. The decision to hike service tax will be a dampener for the sector. We expect to see a 5-7 per cent shift in passengers from air travel to other means of travel,” said Mr Rajinder Rai, President, Travel Agents Association of India.

The Senior Director, Deloitte India (Infrastructure), Mr Hemant Bhattbhatt, felt that the Budget did not provide much for the aviation sector. “The proposals are a bit of concern as the sector is passing through a good phase at the moment,” he said.

But Mr Peter Kerkar, Director, Cox and Kings Ltd, however felt that the increase in service tax for air travel will not have an impact.

“”The travel industry is growing at double digits and the hike is minimal especially for domestic travel. Air fares have been climbing for the last past three months due to increase in fuel prices, but this has not made any difference to people and they continue to travel, '' he said..

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