Saturday, August 29, 2015

How can we fly without horse sense?

Seems that the Prime Minister is concerned about very high fares charged by airlines during peak travel hours, especially if someone has to travel at short notice, like in an emergency. Indian politicians and civil servants think of themselves as masters so they like to use force at every opportunity. They would like to force airlines to charge less but cannot. Why? We are not told but it maybe because the government charges double for tatkal passports and high fares, with no refund on cancellation, on railways for tatkal tickets. If it is alright for the government to screw Indians then surely it applies to businesses as well. But here is where it becomes a farce: the same government is contemplating a tax surcharge, called a 'cess', of 2% on airfares to subsidise low cost travel to remote areas. That will add another 2% to the already expensive tickets. Across India at least 50 airports are lying unused because of a lack of passengers. Not just in towns but the so called international airport in Kolkata, a teeming city of 14 million people, looks half empty. The International Air Transport Association recommends lower taxes on tickets, lower taxes on fuel and lower airport charges because, for business to flourish, people must be able to reach their destinations quickly. Will that happen? No chance. The government is keen to pass the Goods and Services Tax bill which will unify taxes across India, creating a common market but Service Tax maybe increased to 18%, which is considered to be 'revenue neutral'. It has already been increased from 12.5% to 14%. Oil prices have fallen by over 50% but airlines are still levying a fuel surcharge. From 2007-2015 airlines have lost Rs 730 billion and have a combined debt of Rs 750 billion so they would like to clean up their balance sheets. We do not know if they have a tax advantage in reducing base fares but not the fuel surcharge. Of the top 5 airlines offering international flights to and from India 3 are from the middle east. Jet Airways tops the list only because it is able to use the Etihad hub in Abu Dhabi while Air India came in at a lowly number 4. These airlines will have the advantage of cheap fuel and lower taxes in the middle east. Why do our politicians and civil servants not understand this most elementary fact? Because they get to fly free on taxpayer money, with a 'companion'. Politicians are hungry to raise taxes to fund all the social schemes for the poor and they need the poor to be bribed with social schemes, to win elections. The obvious answer is to make us rich. Only 3% of Indians are middle class while 76.9% are in the low income group. Reducing taxes will lower costs so that we can afford to buy more. Which means we will be richer even if our earnings stay the same. If Indians cannot afford to eat out on the ground how can they think of flying? A crocodile can never have horse sense, can it?

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