Airlines chief executives seek roll back of service taxes

Hyderabad, March 3 : Chief executives of airlines Wednesday met Civil Aviation Minister Praful Patel and pleaded that the government should roll back the service tax on all classes on domestic and international flights proposed in the Budget.

"We have discussed all issues concerning the aviation industry, including service taxes on all classes as proposed by Finance Minister Pranab Mukherjee in the Union budget 2010-11," Anil Baijal, the secretary general of the Federation of Indian Airlines (FIA), said after the meeting.

All scheduled and low-cost airlines are members of the FIA.

Currently, service taxes are applicable only to international first and business classes. Once the service taxes is introduced in all classes from April 1, all airlines are expected to hike the fares.

The FIA has also urged the government to lower the taxes and prices of aviation fuel. The airlines in India posted a loss of over Rs.10,000 crore (USD 2 billion) in fiscal 2009. The industry is likely to register a similar loss in the current fiscal.

Earlier in the day, the minister told IANS that he would meet Finance Minister Pranab Mukherjee soon to discuss the issue with him. "I will take up the matter concerning service taxes with the finance minister soon," he said.

Reacting to this, IndiGo Airlines president Aditya Ghosh told IANS that imposing service taxes on all classes of travel would push fares up.

"The budget has also proposed a 5 percent customs duty on crude oil which will also prove detrimental for the airline as its operating cost is already very high," said another airline official.