As if India’s carriers didn’t have enough to contend with, they may now have to cough up more money by way of service tax.
Rising jet fuel prices and the decline in the rupee have put the carriers under pressure, with most of them unable to turn a profit in the latest quarter. Kingfisher has had to cancel flights even as it’s being asked to pay cash by various vendors because it’s no longer considered sound enough for credit. State-run Air India is in any case on government life-support.
Still, increases in fares during the Christmas and New Year holiday period mean things could be looking up for the airlines, although the trend is liable to take the sheen off seasonal cheer for travellers. One airline executive said his company disagrees with the tax department’s demand. Given the sums involved, airline profitability will hinge in some part on how the tax demand is resolved.