ATF tax rationalization may push traffic by 9%

Rationalization of taxes on aviation turbine fuel (ATF) can stimulate air travel by about nine per cent, Center for Asia Pacific Aviation (CAPA) has said in its report titled ‘Maximizing the contribution of aviation to the Indian Economy’. The report, commissioned by Tata-SIA Airlines Ltd, holds that abolition of sales tax will reduce ATF cost by 20 per cent and operating costs of an airline by seven per cent. Assuming that the reduction in cost is transferred to consumers, the consequent reduction in air fares can stimulate air travel demand by around 8-9 per cent, the report states