Union Civil Aviation Minister Jyotiraditya Scindia on Tuesday said there is a huge demand for air travel after the pandemic and urged eight states and Union Territories to reduce the tax on jet fuel.
Air traffic growth will be driven by smaller cities, he said while speaking at the Civil Aviation Ministers’ conference in the national capital.
Domestic air traffic is inching closer to pre-Covid level and in recent times, the daily passenger numbers crossed the four lakh mark twice.
Scindia said that Value Added Tax (VAT) on jet fuel is still high in eight states and Union Territories in the range of 20-30 per cent and urged them to reduce the rate.
Jet fuel cost accounts for a significant part of an airline’s operational costs.
The minister requested Goa, Assam, Delhi, Maharashtra, West Bengal, Rajashthan, Bihar and Tamil Nadu to reduce the VAT on Aviation Turbine Fuel (ATF).
“New growth to come from Tier 2 and 3 cities,” he said and emphasised the need to bring down entry barriers in the context of high VAT on jet fuel in some states.
Currently, 28 states and Union Territories have VAT on jet fuel in the range of 1-4 per cent, he added.
He described the country’s civil aviation sector as a “towering phoenix”, and operating seamlessly in a high-demand environment compared to issues faced by travellers and airports in different parts of the world.