Civil Aviation Ministry brings tax relief for airline companies; air travel may become cheaper

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Updated: Jan 10, 2020 4:03 PM

The Civil Aviation Ministry has decided to compensate all airports as well as the Airport Authority of India for the revenue loss that will occur because of this waiver.

 

FTC varies at different airports and added up with GST and VAT pushes the cost of running airlines higher.

Air travel may become cheaper soon as the Ministry of Civil aviation has decided to waive off Fuel Throughput Charges. The FTC was levied on fuel companies by airports across the country for the transportation of jet fuel to airline operators. The exemption can potentially reduce the operational cost of airlines as fuel accounts for the major expense companies have to bear.  Airlines companies may be able to save up to Rs 500 crore in a year as fuel expenses account for approximately 40% of the total expenses incurred by the companies. The FTC varies at different airports and added up with GST and VAT pushes the cost of running airlines higher. The ministry called the move taken to make air travel and air cargo transportation affordable and sustainable.

The Civil Aviation Ministry has decided to compensate all airports as well as the Airport Authority of India for the revenue loss that will occur because of this waiver. Ministry’s circular addressed to the Chairperson of the Airports Economic Regulatory Authority of India Balwinder Singh Bhullar and a joint secretary in the ministry Rubina Ali revealed these details.

The circular from the MCA further states “ Numerous rounds of stakeholder consultations have been held by the Ministry in order to rationalize the present mechanism of invoicing of ATF fuel throughput charges. These duly incorporated the deliberations of the two industry Working Groups on the subject comprising of representatives of airline operators, airports, fuel infrastructure facility providers, into-plane fuel service providers, and oil marketing companies without prejudice to the outcoming of judicial proceedings on the matter of classification of fuel throughput charges as aeronautical or nonaeronautical services initiated by some PPP/JV airport operators.”

The Ministry had constituted a panel in August 2019 to rationalise the FTC on Aviation Turbine Fuel. This latest round of tax cut is an extension of tax reliefs given by the union government to businesses in the last few months to stimulate demands in a flagging economy.

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