Air Travel in India could become expensive

Airline operators in India have said that air travel in the country could become expensive in the coming months. The government has proposed in the budget that withdraws the exemption on withholding tax of 12-15 per cent on lease rentals.

The exemptions given on this tax would now come to an end on March 31, 2007. Mohan Kumar, consultant for low-fare airline Air Deccan spoke on this new development: “This will push up lease rentals by 10-12 per cent.”

Bruce Ashby, CEO of Indigo added: “The withholding tax will hurt us as we have signed leases for only some of these planes.” They are planning to induct eight planes this year and eight in 2009.

They are not alone. Even the government owned Airline companies like Air India and the Indian are going to suffer. V Thulasidas, CMD Air-India and chairman of the Federation of Indian Airlines spoke on the new budget guidelines: “This will significantly increase the fleet acquisition costs of Indian carriers, particularly in a market where demand for aircraft is greater than the supply. We hope that the provision can be included in the Finance bill.”

Popularity: 26%