Patna: The Bihar government has reduced the tax on aircraft fuel (ATF) from 29% to just 4%. This decision could make air travel cheaper. It is believed that this reduction could reduce the fare on the Patna-Delhi route by up to Rs 1000.
Also, the number of flights departing from Bihar could also increase. Deputy Chief Minister Samrat Chaudhary said that this could double air travel in the state, which would increase tourism, provide new employment opportunities to people and benefit the economy of Bihar.
What will be the benefit?
Cheaper air travel:Â Due to the reduction in VAT, the price of air tickets will come down, which will benefit the common man.
Number of flights will increase:Â Due to lower costs, airlines can start more flights.
Boost to tourism and economy:Â Cheaper flights will increase the number of tourists in Bihar, which will benefit local businesses.
Better air connectivity:Â New VAT rates will be applicable at Patna, Gaya and other airports, which will strengthen air connectivity.
No change in Regional Connectivity Scheme (RCS)
There is no change in the 1% VAT rate already applicable under the Regional Connectivity Scheme (RCS). This facility will continue for small airports and regional flights.
The decision was taken on the advice of the Central Government.
The Central Government had requested to reduce VAT on ATF, after which the Bihar Government took this step. Earlier, VAT was less at Gaya Airport, but now this rule will be applicable at all airports including Patna.
How much will the Patna-Delhi airfare be reduced?
Air travel can become cheaper due to the reduction in VAT on ATF. In fact, this will help airlines save a lot per flight. Let’s understand it with an example. Suppose an airline requires an ATF of Rs 10,000 for a flight from Patna to Delhi. Earlier, when the VAT was 29%, Rs 2,900 tax had to be paid on Rs 10,000. That is, the total cost was Rs 12,900. But now that the VAT has been reduced to 4%, only Rs 400 will have to be paid as tax on the same Rs 10,000. Thus, the total cost of ATF will be Rs 10,400. This means that the airline will save about Rs 2,500 on each flight. This saving can help reduce the price of tickets.
Impact on airfar
Airlines usually add a portion of the fuel cost to the ticket price. If this saving is passed on to passengers, Patna-Delhi fares can be reduced by around Rs 500-1,000 per ticket. In fact, the cost in a flight is spread across multiple passengers. For example, if there are 100 passengers on a flight, there will be a saving of around Rs 25 per passenger. But airlines can make up for it and reduce the fare by Rs 500-1,000.
