THIRUVANANTHAPURAM: Yielding to pressure from various quarters, the state government decision to cut the jet fuel tax from 28.75 per cent to five per cent at three airports — Thiruvananathapuram, Cochin and Kozhikode — even while keeping it at one per cent for Kannur International Airport, brought cheers to the aviation sector, although the move will burn a Rs 100-crore hole in the state coffer.
According to aviation experts, the state would be an attractive destination for various airlines as neighbouring states like Tamil Nadu and Karnataka are charging a state tax of 29 and 28 per cent, respectively, on jet fuel.
Telangana, which has one per cent state duty on jet fuel, and Odisha and Chhattisgarh (both 5 per cent) have set a precedence much before the state. Sources said the tax cut given to Kannur airport, a PPP model airport with private stakeholders having majority stakes, has raised some ethical questions like promoting a private airport at the expense of neighbouring airports in the public sector.
They added it was the communal tinge attributed to the development that forced the state to cut the tax on jet fuel as there was a campaign ahead of the general election that the Calicut airport was deliberately neglected by the state.
‘It will bring healthy competition over Kerala skies’
The aviation industry feels the cut in jet fuel tax will prompt the airlines to fill their tanks from Kerala as neighbouring airports have high state tax on jet fuel with Maharashtra and Delhi charging 25 per cent tax on ATF, the most frequented destinations of airlines from here. For Kerala, giving tax cut on jet fuel will promote the airlines to extend their service to Kerala, which will provide competent prices to customers, although passenger load factor is a critical factor, said Jacob K Philip, aviation expert.
The tax cut benefits would benefit only domestic passengers as the international airlines that operate to and from the state have not been charging VAT as per the new GST regime. Though the Central Govt had hiked the excise duty on ATF to 14 per cent from 8 per cent in 2016, it has cut it on aviation turbine fuel to 11 per cent with effect from last October 11. The IATA Agents Association of India has also hailed the tax cuts. “It would bring healthy competition over the skies of Kerala,” Biji Eapen, national president, IATA, said.