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Scindia bats for 1% VAT on ATF to boost flights

New Doon terminal to be open on Oct 7

Scindia guns for strengthening of the aviation infrastructure in Uttarakhand, Ladakh, Andaman

NEW DELHI, Sep 21 (The CONNECT) - Civil Aviation Minister Jyotiraditya M. Scindia today virtually interacted with Chief Minister of Uttarakhand Pushkar Dhami, Lieutenant Governor of Andaman and Nicobar Islands Admiral DK Joshi, and Lieutenant Governor of Ladakh RK Mathur on drastically cutting the VAT on ATF (aviation turbine fuel) to 1% from the current 20% and strengthening of the aviation infrastructure in their respective states.

During the meeting with Dhami, the minister also discussed the reduction upgradation of 8 UDAN heliports (Almora, Chinalisaur, Gochar, Nainital, Haldwani, Sahastradhara, Srinagar and New Tehri) and start of construction work on 5 new heliports by the end of this financial year. An amount of Rs.8.44 crores allocated for the development of each heliport.

It was noted that the new terminal at Dehradun airport will be inaugurated on October 7 and it will result in increase in passenger capacity from 250 pax/hour to 1800 pax/hour. The terminal has been built at a cost of Rs. 457 crores,

Pawan Hans will commence the Pantnagar-Pithoragarh-Pantnagar helicopter service from 07-October 2021.

Under the UDAN project, 14 new routes have been awarded in this month: Dehradun-Srinagar-Dehradun, Dehradun-Gauchar-Dehradun, Haldwani-Haridwar-Haldwani, Pantnagar-Pithoragarh-Pantnagar, Chinayalisaur-Sahastradhara-Gauchar, Gauchar-Sahastradhara-Gauchar and Haldwani-Dharchula-Haldwani

Scindia expressed confidence that with cooperation of the Uttarakhand state government, we will soon bring new opportunities for development in the state through civil aviation.

During the meeting with the Lieutenant Governor of Andaman & Nicobar Island, the minister mentioned that the Centre is determined to make all efforts for tourism development in a place of incredible beauty like Andaman and Nicobar Islands.
He also discussed the progress construction work of the new Integrated Terminal at Port Blair which is slated to be completed by mid-2022

During the meeting with the  Mathur, there was a detailed discussion on the construction of airports in Ladakh along with air connectivity. Scindia assured that the cooperation between the Ladakh administration and the Ministry of Civil Aviation will bring new opportunities for economic growth through better air connectivity to the entire Ladakh region.

A team of experts from AAI and DGCA will be sent to investigate the technical issues related to the Kargil airport. A feasibility study has been done by Pawan Hans for the construction of four new heliports. The report will be given to the Ladakh administration by October 1.

Scindia has earlier written letter to 22 States and UTs urging them to rationalize VAT on ATF across all airports within the range of 1% to 4%. He has asked them to take forward common intention to boost air travel and connectivity in State with a view to accelerate its economic development.

The price of ATF is a major component of the operating cost of airlines with that, the tax on ATF contributes significantly to the ATF price. Addressing this issue would enable a force multiplier effect with regard to air connectivity in states.

Citing examples of progressive states such as Kerala, Andhra Pradesh, Meghalaya, Nagaland, Sikkim and Telangana , the Minister wrote that they have brought down the VAT to one percent and even below. As a result, they have seen a substantial jump in the number of aircraft movements in their states.

For example, the Government of Kerala has brought down VAT on ATF from 25% to 1%. Subsequently, the number of aircraft movements at Thiruvananthapuram airport increased from 21,516 flights to 23,566 flights in a span of 6 months ie an increase of 2050 aircraft movements post reduction of VAT. Similarly, aircraft movements at Hyderabad saw a rise from 76,954 flights to 86,842 flights in a span of 6 months i.e. an increase of 9888 aircraft movements after the reduction of VAT on ATF from 16% to 1%. Many other states, such as Andhra Pradesh, Chattisgarh, Nagaland, Orissa, Punjab and Sikkim have followed suit.

The Minister brought to attention of the states that air connectivity directly promotes tourism growth, output growth and employment generation, in addition to various indirect benefits to the economy. In fact, the aviation sector has a high output multiplier of 3.25 and employment multiplier of 6.1.

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