The Tamil Nadu government has asked airlines to add flights and serve more destinations from Chennai airport, both within India and abroad, after cutting the tax that the carriers had identified as the obstacle. The approach was reported on Tuesday by Sunitha Sekar in The Hindu.
The sequence had become familiar. A number of meetings were held between the State government, the Airports Authority of India and the airlines, and whenever the government asked the carriers to add flights and expand connectivity, their primary demand was that value added tax on aviation turbine fuel be reduced.
The demand had a straightforward basis. Jet fuel accounts for a considerable portion of an airline's operating costs, and the carriers, the Airports Authority of India and the Ministry of Civil Aviation had all been pushing for a reduction for some time.
The State then made the cut. Value added tax on aviation turbine fuel at Chennai airport has come down from 29 per cent to 16 per cent, a reduction of thirteen percentage points.
The airlines were happy, sources said, and have assured the government that they will expand services from Chennai. "We have been constantly persuading them to connect more destinations. Now that VAT has been slashed, the airline representatives have agreed to add more flights. We hope to see a difference soon," one source said.
The assurances have been quantified. One of the largest airline operators at Chennai airport has promised to increase its number of flights by nearly 25 per cent, and another prominent operator by eight per cent, according to a second source.
That source also set out what the promises do not contain. "But they have not promised a time-frame. There may not be an immediate impact in terms of increasing the number of flights at Chennai. We have to wait and see if there is an increase in the summer schedule," the source said.
The State has one specific request outstanding. It has asked one of the airlines for a direct service from Chennai to Japan.
The summer schedule is therefore the first point at which anything could be checked, since carriers plan capacity a season at a time and publish it in advance.
On the State's own account, however, the transaction is already complete. Thirteen percentage points of tax have been exchanged for two percentages. One of them is twenty-five and the other is eight, and neither has a date attached to it.
This is a more robust arrangement than it first appears. A flight with a percentage but no departure time is not yet a flight; it is a ratio. Connectivity from Chennai has accordingly improved in the only tense available to it, and the improvement cannot be inspected, because there is nothing yet to inspect.
The operational advantages are considerable. A percentage cannot be allocated a slot and does not require a stand, a gate or a crew. It cannot be held on the apron. It is immune to weather, to fuel prices and to the tax rate that produced it.
The Department of Unnecessary Research has reviewed the position and finds the State's side of the bargain to be the only part of it that has taken effect. The fuel is cheaper today. The flights are cheaper in principle.
Chennai has been promised twenty-five per cent more flights and eight per cent more flights. They cannot be boarded, cannot be delayed and cannot be cancelled, which makes them the most reliable services the airport has ever been offered.