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At the launch of Air Pegasus, a low-cost airline, at Kempegowda International Airport (KIA) here on Sunday, Union Aviation Minister Ashok Gajapathi Raju said, “Taxes are an impediment to MRO activity. I have asked the finance ministry to look into it. Because, if there’s no activity, there’s no revenue.”
“We will operate a daily flight between Bengaluru and Hubbali in the mornings. The timings will be convenient for taking connecting flights to other cities from Bengaluru,” said Shyson Thomas, managing director, Air Pegasus. The airline is to also launch a daily service to Thiruvananthapuram from Monday, also on an ATR aircraft.
Most airlines fly their planes abroad for MRO — Sri Lanka, Malaysia, Singapore — because of the steep tax rates here. The opportunity from MRO is estimated to be about $700 million.
According to Raju, the taxes on ATF range up to 30 per cent. “It’s a dampener to aviation activity,” he added. “We need to simplify the tax structure to make the sector attractive.”
He has written to all chief ministers to slash the value added tax on ATF, as 40-45 per cent of the operational cost of operators is on jet fuel. “Some (CMs) have responded but not many of them. The tax on jet fuel is 4-30 per cent across states. To tax them (airlines) to death is not good. The tax on jet fuel needs to be rationalised,” he reiterated.
The new aviation policy is to also address the issue of route dispersal guidelines and inter-connectivity, as the prevailing rule does not allow an airline to fly abroad without five-year operational experience and at least 20 aircraft.
