Abolishing the 15 per cent inland air travel tax (IATT) is expected to lead to a lowering of domestic air fares by up to 15 per cent. Reducing excise duty 8 per cent on aviation turbine fuel (ATF) from 16 per cent will help the domestic airlines improve their cash flow management- Indian Airline alone will save around Rs 60 crore annually from lower excise. The high-power Naresh Chandra Committee, which had been set up by the Government to suggest making air travel cheaper, had suggested replacing IATT and passenger security fee with a sector specific ad-valorem duty, in its report submitted barely a month ago.

Welcoming the finance minister's announcement, Rajiv Pratap Rudi, Minister for Civil Aviation felt that the move would help make air travel more affordable for the common man. The Government has also done away with the Foreign Travel Tax (FTT) of Rs 500 per passenger that was being levied. All the announcements made today come into effect from Friday. Travel industry sources feel that with lowering of air fares, domestic air travel would witness its highest ever growth.

Indian Airlines and Sahara have announced that passengers who had already booked tickets for flights after the announcements would be entitled to a refund on production of their ticket jacket. Other airlines are expected to follow suit.