Patel seeks rollback of service tax on domestic air travel

In his Budget speech on February 26, Finance Minister Pranab Mukherjee had proposed a service tax of 10 per cent on both domestic and international travel. Earlier, the service tax was restricted only for international travel.

"We are looking into this issue seriously and will request the finance ministry to roll back the service tax. We are hopeful that the latter would respond favourably to our request," Patel said at a press conference at the five-day India Aviation 2010 that kicked off in Hyderabad.

Replying to a query on security issues in the aviation sector, the civil aviation minister said the job was not over by creating infrastructure for the aviation industry. "The country needs safe and secure aviation. Indian aviation will not grow at the cost of safety and security," he said. Patel said the ministry was working on introducing full-body scanners at all airports in the country.

"Security is a major concern for aviation worldwide, and more particularly in India. While we consider the fact that terrorism and threats have to be dealt with strongly, we should have adequate security measures in place. Full-body scanners will soon be in place in India. It will be done in a manner which is acceptable and keeping with the best moral and integrity standards," he added.

Stating that Air India needs to tighten its belt in terms of financial health, Patel said the Rs 1,200-crore allocation to the national carrier in the recent Budget was only one of the measures to give the ministry's helping hand to the latter. "The airline plans to return 22 leased aircraft, starting this month," he said.

Indian aviation will grow much beyond the expectations. The last quarter of 2009 and early 2010 has shown some recovery. The year 2011 would be of cautious optimism, Patel said, adding that the country required up to 3,000 flights in the next 10 years. India could absorb 500 helicopters and about 300 aircraft in the next five years, and required creation of up to 400 airports from the present 90, he said.

"The premise is simple. Demand for pilots, which evaporated last year, is significant now with close to 120 flying schools operating in the country. The industry will see a very strong path of recovery from the beginning of 2011. All these are indicators," Patel pointed out.

The bidding process for the new Mumbai airport would be completed in a year, Patel said, adding the Belgaum airport in Karnataka would receive commercial flights very soon.