Sunday, May 8, 2011

Gujarat State Inter City Air Connectivity - Fuel to be cheaper for flights

To give civil aviation a major boost in Gujarat, the state government has brought down the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) substantially from 30% to 4%.

However, this relief on VAT on ATF will apply only to the operators who will run flights within the state and also to non-scheduled operators.

The reduction in VAT will mean people will get to fly within the state by paying low airfares.

It was a policy decision by the state government. This will give a boost to civil aviation in the state. Now, more airlines can plan their flights between major cities of the state.

At present, there are a very few flights connecting these cities.
As the state government has reduced the VAT on ATF from 30% to 4%, it will bring down the cost of operation for the small carriers as fuel cost is the major expense for the airlines.

However, this reduction in the tax will be applicable only to those flights operating within the state.

Now, flights between cities like Ahmedabad City, Bhuj City, Bhavnagar City, Jamnagar City, Rajkot City, Vadodara City and Surat City are not available. But with this move, it will be feasible for the airline companies to operate small flights between these cities in the state.

The airfare for such intra-state flights is likely to be around Rs 3,000, which is almost same as private taxi fare between these cities.

The official said that the government was taking such initiatives to develop Ahmedabad and Surat as major aviation hubs, where the airlines would be attracted because of reduction in VAT on ATF.

He claimed that
Gujarat States was the first state in the country to slash the VAT rate on ATF.

While a private company has already decided to start flights between major cities of the state, officials of another airline will soon meet state government officials to chalk out the details.

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