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The government's decision to abolish taxes on air travel and reduce excise duty on aviation turbine fuel (ATF) had its immediate impact on air travel with all major airlines slashing their fares , taking them below first class AC train fares.

The decision to reduce excise duty on ATF from 16 to eight per cent and abolition of Inland Air Travel Tax (IATT) as well as Foreign Travel Tax (FTT) of Rs 500 per passenger was welcomed by the entire aviation industry as also Civil Aviation Minister Rajiv Pratap Rudy.

Officials of Indian Airlines, Jet Airways and Air Sahara said the abolition of IATT would immediately be implemented and the passengers would get the benefit. The IATT constitutes 15 per cent of the fares. Spokespersons of IA and Jet Airways said the apex fares would also be reduced with the abolition of the IATT, taking them below the first class air-conditioned fares.

The fares are likely to come down further when the benefits of reduction in excise duty on ATF from 16 to eight per cent is passed on to the consumers. Generally, the ATF component constitutes almost 35 per cent of the operating cost.

Officials of Indian Airlines and Air Sahara also announced abolition of IATT and the resultant cuts in the regular and apex fares. While the Delhi-Mumbai apex fare for 30 days would be Rs 3,154 compared with a first-class train fare of Rs 4,135, Mumbai-Kolkata 30-day apex fare would be Rs 3,589 compared with first class train fare of Rs 4,135, a Jet Airways spokesman said, adding the IATT component of regular fares would also be removed.

Similarly, Delhi-Chennai fare would be Rs 3,502 compared with first class train fare of Rs 4,301 and Delhi-Bangalore Rs 4,372 compared with Rs 5,730 by train.

Welcoming the move, industry sources said it had been their long-standing demand that all taxes on ATF be abolished and its levels be brought down to at least four per cent as had been done by Andhra Pradesh. Amadeus managing director A Bhatia said the cut in IATT and ATF would lead to a 15 to 20 per cent drop in air fares.

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