Aviation Ministry Seeks Rollback Of Service Tax Proposal (04-Mar-2010)
Union Civil Aviation Minister, Praful Patel stated that the ministry of civil aviation will ask for a total withdrawal of service tax imposed on domestic air travel in the Budget.
He will however take up the issue with the Finance Ministry with hope that the FM would respond favourably to the Civil Aviation Ministry''s representation.
Meanwhile, domestic travel too was brought under the service tax bracket, in the Budget presented on February 26.
Previously, it was there only for international travel.
Patel said that the airline needed to tighten up its belt, when asked about Air India''s financial health.
He added that the airline was also planning to return 22 leased aircraft starting this month and extending over the next couple of months.
Previously, International Air Transport Association (IATA) stated that the International airlines have started to see development in demand.
But, however, instead of profits they may register losses to the tune of $5.6 billion this year.
The 3% rise in freight volumes from December to January is particularly encouraging.
Earlier, Airline industry body IATA stated that the revival in global demand for air traffic garnered speed in January.
It said this in another sign that world trade is on the mend after the steep decline last year.
International air freight traffic demand increased 28.3% year-on-year in January while passenger demand was 6.4% higher.
Meanwhile, it was said that after going through one of its worst phases ever, the global aviation industry is showing signs of revival.
Leading the way are carriers from Asia, particularly those from West Asia, says the International Air Transport Association (IATA).
The statistics on international scheduled traffic results for November 2009 released suggest a definite trend of rise in the international movement of passengers and freighters.
This is even though there are no real improvements over the peak levels.
Meanwhile, as per a survey by the International Air Transport Association Airline, companies expect a major narrowing of losses in 2010.
Improvements were witnessed in all the indicators of airline business confidence but that it did not necessarily mean a return to profit.
A divergence was evident between more positive Asian airlines and more pessimism among European airlines.
Earlier, Union Civil Aviation Minister Praful Patel stated that all over the world, due to global recession, fuel prices and load factor, aviation sector has suffered impediments in 2008-2009 but it will be revived by 2011.
There was a decline of 30% in passenger load factor which in turn lead to losses in many top airlines in the world including British Airways.
But, he said that last quarter of 2009 has again raised some hopes of revival in the country.
The airlines have strongly favoured declaring civil aviation as core infrastructure so that the sector could get tax and other benefits.
On the other hand, Iata which is the airline industry body, predicted that airlines will lose $5.6bn (£3.5bn) next year that is an increase from the $3.8bn it original forecast while Iata also reiterated that losses this year would probably total $11bn.
Chief executive Giovanni Bisignani stated that 2009 had been an annus horribilis for the sector and that the worst is likely behind them. He also said that the coming year would see more passengers along with increased air cargo volumes.
European airlines were likely to lose the most money in 2010, $2.5bn between them, while North American airlines would be likely to lose a total of $2bn.
Meanwhile, the Federation of Indian Airlines (FIA) opposed the new ground handling policy and the proposed amendments in the refund rules due to flights delays.
The airlines'''' body formed a committee, headed by its general secretary Anil Baijal to make its representation to the government.
An airline provides air transport services for passengers or freight, generally with a recognized operating certificate or license. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit.
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