Odisha readying to cut ATF tax to 5% to boost air traffic

Step aimed at wooing both global and domestic carriers to run flights to and from the city

The Odisha government is readying its plan to cut sales tax on aviation turbine fuel (ATF) to five per cent from 20 per cent with an aim to woo global and domestic carriers to run flights to and from Bhubaneswar.

This follows the Union Cabinet’s nod on October 30 to accord international tag to Biju Patnaik airport in the city.

“We have no objections to curtailing ATF sales tax to five per cent even if it means a loss of nearly Rs 20 crore annually to the state exchequer. Pruning sales tax will help attract many airline carriers to the state. The government is expediting the process to cut tax on ATF and the file will soon be sent to the chief minister’s office for approval,” said an official.

The international tag for the city airport is expected to offer improved connectivity, wider choice of services at competitive cost to the air travellers, boost international tourism and economic development.

Realising the growing importance of Bhubaneswar as a business destination, international airline operators like Fly Dubai and Air Asia had evinced interest in running their flights following commissioning of the international terminal facility.

Gurgaon-based low cost carrier Indigo has also presented a proposal to the general administration (GA) department, seeking reduction in ATF sales tax on the lines of the Andhra Pradesh government to enable it to start global air operations from the Bhubaneswar airport. In February 2008, the Andhra Pradesh government had drastically reduced sales tax on ATF from 33 per cent to four per cent.

Sales tax on ATF ranges from 4-32 per cent in various states. The tax on ATF in Maharashtra stands at five per cent except for the Mumbai and Pune airports. The Chhattisgarh government has brought down ATF tax rate to four per cent to boost airline connectivity.

The ministry of civil aviation had urged various state governments to slash tax on jet fuel to five per cent.

The Bhubaneswar airport which belongs to Airports Authority of India (AAI) is suitable for operation of Code ‘D’ aircraft of type B-767-400.

The airport is equipped with facilities for night operations, runway of dimension 2,743m X 45m, apron to park six aircrafts and navigational aids. A new domestic terminal was inaugurated at the airport in March this year. The terminal has all modern amenities, and is capable of handling arrival and departure of 400 passengers each way.