HYDERABAD: Expect more airliners to operate their services to Hyderabad in the future. For airline operators, the biggest bonanza comes in the form of lesser, or probably the lowest Value Added Tax (VAT) on refuelling of aircraft at Hyderabad’s RGIA.
The state VAT of 16 per cent levied on aircraft refuelling at RGIA has now been reduced to just 1 per cent effective immediately. The announcement was made by industries minister K T Rama Rao soon after Telangana Chief Minister K Chandrasekhar Rao laid the foundation stone for the airport expansion on Friday.
The reduction in State VAT levied on aircraft buying ATF from Hyderabad to just 1 per cent is expected to bring in more transit flights to the city. However, this will not bring down the cost of flight tickets to and from Hyderabad say economists who welcomed the state government’s decision and called it “a move in the right direction.”
The airport will also get a dedicated expressway to connect the airport to the city. “We have reduced the state VAT on ATF from 16 per cent to 1 per cent, effective immediately. We also have allocated a whole of Rs 4,650 in the state budget for the airport express connectivity,” announced Rama Rao.
The Hyderabad Airport City, being developed by GMR as a part of the airport expansion, will include a 12,000-seater Exhibition Convention Centre (ECC). The project will have pharma companies, educational institutions, aerospace firms, logistic firms all located around the expanding RGIA. The project is a joint venture with the state government holding a 13 per cent stake.
“The airport expansion will cost Rs 2,000 to Rs 2,500 crore in first phase of expansion and can take two-and-half years to three years for completion,” said GHIAL CEO SGK Kishore.
Speaking about the efforts being made to improve air traffic to the RGIA, Kishore said, “Presently RGIA has one runway and one secondary runway, the latter is being made fully functional to improve Air Traffic Movements.”
“With VAT reduction we expect increased air transit to the city. This is an incentive for airlines.” he said and added, the airport expansion is expected to increase passenger volume to 80 million from the present 12 million.