Govt decision to slash VAT boosts air links with city
December, 02nd 2013
Two days after the state cabinet slashed the Value Added Tax (VAT) on Air Turbine Fuel (ATF) from 20 per cent to five per cent, requests have poured in from both international and domestic carriers to operate from the Biju Patnaik International Airport.
While Air Arabia is the latest international carrier to express an interest in operating from the airport after the November 27 decision by the state government, on Saturday, Indigo airlines has also sought the airport authorities' permission to add five additional flights to its present fleet of nine flights.
Earlier, Qatar Airways for Abu Dhabi, Silk Air for Singapore, Indigo for Bangkok and Fly Dubai, which operate direct flights from the airport, had approached the authorities.
"For permission to operate flights from here, the fliers will have to submit their schedules to the Director General of Civil Aviation (DGCA), which will be forwarded to us," said airport director Sharad Kumar. He informed that verbal communication with the airline officials is underway and international operations are expected to begin by the first week of January.
The reduction of the VAT and AVGAS to five per cent will initially be effective for a period of five years, said sources. "Air connectivity is likely to be streamlined and made affordable after the slash. More places will be connected to Bhubaneswar as fliers, who were earlier reluctant to refuel here, will find it cost effective," said a state government official.
The state government on November 4 had expressed keenness to reduce VAT on ATF, after the chief minister promised to lower the rate from 20 per cent to four per cent during the inauguration of new domestic terminal in March. Although the move is expected to attract international carriers, it will cost the state nearly Rs 20 crore in the process.
The airport authorities are hopeful that though Odisha sees few foreign tourists now, there will be a 25 per cent increase in its air-passenger flow after commencement of international operations. International operations will help increase the number of foreign tourists to one lakh. Last year, of the 65,000 foreign travellers who visited the state, only 3,800 came by air, said sources.