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Air service tax raised, Air India gets less than expected in Union Budget


Indian airlines, recovering from the economic crisis, received a setback in the Union Budget for 2011-12 due to a proposal to raise the service tax on domestic and international air travel. However, while the increased tax burden will increase the cost of travel it is unlikely to have much impact on overall traffic growth. [2361 words]

Unlock the following content in this report:


  • Service tax on air travel to be raised 
  • LCCs moving into international arena to feel brunt
  • Aviation Minister and IATA express concern
  • Fares on the rise as fuel costs jump and UDFs add to cost of travel
  • USD2bn civil aviation sector budget in 2011/12
  • To focus on ‘accelerated development’ of physical infrastructure
  • Struggling Air India to receive further USD266m
  • Budget more negative than positive for aviation

Graphs and data:

  • Tourism industry reaction to budget for Indian civil aviation sector: 2011/12
  • UDFs levied at Indian airports
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