Abolition of sales tax on ATF can stimulate air travel by 9%, says report

NEW DELHI: An abolition of sales tax on Aviation Turbine Fuel (ATF) or jet fuel can stimulate air travel by about 9%, says a report named Maximising the contribution of aviation to the Indian Economy.

The report, prepared by Centre for Asia Pacific Aviation Ltd (CAPA) and commissioned by Tata SIA Airlines Ltd, says that abolition of sales tax on Jet fuel will reduce ATF cost by 20% and reduce operating cost by 7%.

Considering the reduction in cost is transferred to consumers "stimulated air travel demand by around 8 to 9%."

The report also says that the cost of jet fuel is 45% more expensive in India compared to neighbouring economies.

The report also talks about the issues around ease of doing business and issues around Make in India vision.

While high taxation on Maintenance Repair and Overhaul is being termed as going against Modi Government's Make in India vision and a period one year and involvement of ten agencies in getting an airlines licence makes the country rank worse on the ease of doing business.