‘Make Mumbai airport a special economic zone’

Practically all international flights from Europe to South East Asia and Far East overfly Indian sub-continent due to inordinately high airport charges and unattractive air turbine fuel prices, Kakkar said.

Asking the government to increase the foreign direct investments to 49 per cent from the present 40 per cent into the aviation industry, he recommended that Mumbai airport should be developed as a SEZ so that charges levied on airport facilities, air turbine fuel etc would be applicable as per international benchmarks.

Asking the government to abolish the mandatory 15 per cent inland air travel tax (IATT) levied on domestic airlines to make air travel in the country more affordable, the white paper said: ‘IATT was levied during the war period and is not justified now. It should be abolished or alternatively a mechanism be established to ensure that the entire receipts from the tax is used in the development of the aviation sector.’

An airline bears the burden of other levies including sales tax, excise duty, surcharge on sales tax, turnover tax ex-storage point price and octroi, this is then passed over to the customer in the form of a basic fare. It said IATT pushes up prices only for domestic travellers and was not payable by persons buying tickets in foreign exchange. ‘The tax makes foreign leisure travel more attractive for Indians allowing them to spend foreign exchange overseas at the expense of the domestic tourism business,’ the chamber pointed pointed out.

Making a case for lower governmental expenditure on official travels, the report says that ‘lower taxes will imply lower fares which in turn will result in lower governmental expenditure, thus offsetting losses due to reduction in taxes.’

The chamber said lowering airfare to the level of 1st AC rail fare and upgrading the entitlement to travel by air, would fill-up vacancies in domestic flights, thus increasing revenue.