India sore over UK move to tax airlines on seat basis

The UK government’s move to charge airlines even on empty seats has not gone down well with the Indian civil aviation ministry. The UK authorities have proposed that every airline from across the world flying there should be taxed on the number of seats instead of passengers carried by them. This means, even if the load factor is below flying capacity of its aircraft, the airline will have to fork out for vacant seats. The aviation ministry is opposing the idea as it may cost heavily to the airlines and so the passengers. “This is just not possible. We are not the only one opposing the idea. We have asked the Indian high commission in London to give us a report on the exact proposal, and then only we would take up the issue,” an aviation ministry said. The UK levy is christened as London departure tax that varies between Rs 4,500 to Rs 7,500 per passenger, depending on economy or business class. Currently, domestic carriers Air India (AI), Jet Airways and Kingfisher fly to UK. While Air India has 17 weekly flights to London from Delhi and Mumbai, Jet has 21 flights a week, two from Mumbai and one from Delhi every day. Kingfisher has 11 weekly flights to London. The average load factor on this route hovers around 70 per cent for all the carriers. The ministry official said even if taxes are levied on reciprocal basis, it would impact domestic carriers. “There are hardly two UK airlines flying to India, the biggest one being British Airways. British Airways schedules are such that it would have better load factor than any of our carriers that usually reach in the afternoon in UK. That is also the case with Virgin Atlantic. This means, a lower load factor for our carriers,” the official said. This is not the only way that UK is trying to push up its revenues. It charges over £400 per passenger for using VIP lounge at the terminal-5 of Heathrow airport. The Indian government is not happy with that too as there are no such charges levied by Indian airports. “We have taken up the matter with UK officials. We should sort it out soon,” the aviation ministry said.

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The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).