Air fares dip lower than AC 1

The two major domestic airlines—Indian Airlines and Jet Airways—immediately got down to calculating the revised fares. A Jet Airways spokesperson said they will be seeking clarification from the Government on whether passengers who have already purchased tickets could get the benefits.

The APEX fares being offered by domestic airlines in certain sectors will now fall below the AC Ist class rail fare. For instance, if a passenger were to book a ticket from Delhi to Mumbai 30 days in advance by Jet Airways, the fare will now be Rs 3154 as compared to Rs 4135 in AC Ist class by Rajdhani Express. In the case of Indian Airlines, which offers special fares to those booking 21 days in advance, the fare will now be down to Rs 3250 for the same route.

‘‘The abolition of IATT will directly benefit domestic air travellers since they will enjoy commensurate reduction in air fares… the most important relief is reduction by half in excise duty (from 16 per cent to 8 per cent) in ATF. The annual savings for Indian Airlines on this account are likely to be around Rs 60 crores,’’ said Indian Airlines CMD Sunil Arora.

Air Sahara CEO Uttam. K. Bose said the announcement will lead to at least a 15 per cent reduction in air fare. ‘‘We are still working out the details. This is indeed a welcome step and the cut in excise duty on ATF is an old demand of this industry.’’

The IATT, which was introduced in 1991, had been identified as an unnecessary cost escalator by the industry for the past couple of years. The Ministry of Civil Aviation too had backed the industry on this and Civil Aviation Minister Rajiv Pratap Rudy has been regularly raising the matter with the Finance Ministry.

‘‘These measures will go a long way in making air travel affordable to the common man. Reduction in excise duty on ATF has been a longstanding demand of airline operators. Today’s announcement will definitely bring cheers to the aviation industry which has been going through a difficult period,’’ said Rudy while thanking Prime Minister Atal Bihari Vajpayee and Finance Minister Jaswant Singh.

Airline operators said they now hope the Government will also move fast on ensuring that the sales tax levied on ATF by state governments does not cross an overall average of 4 per cent. At present, the average is around 22 per cent.