Fuel tax rise no threat to air travel Fuel tax rise no threat to air travel
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The consistent double-digit growth in demand for air travel will off-set rises in Aircraft Turbine Fuel (ATF) tax, which means passengers and travel industry professionals can rest easy in the knowledge that the fare increases won’t hurt the industry.
A Business Line report predicts that the impending 2% ATF tax increase will only translate to fare increases of INR200-250 depending on the sector.
After posing 17% growth in passenger demand last year, the public appetite for air travel is so strong that such minor fare increases are not expected to affect people’s choice of transportation.
peaking to Business Line, ICICI direct.com Senior Analyst, Mr Rashesh Shah, says as long as demand for air travel is on the rise and crude oil hovers at US$91-92 a barrel, passengers will be able to absorb minor increases.
However, if crude oil prices go beyond US$95 a barrel, airlines might find it difficult to pass on the increase without impacting traffic.
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