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Tribune Special
Air carriers play tricks
Evade service tax; offer lower fares but no seats
Prabhjot Singh
Tribune News Service

“In reality, they are going up by 3 to 4 per cent annually but are not reflected in the published fares. The airlines are playing mischief and instead of raising the fare, they are charging fuel surcharge from customers by keeping the basic fare unchanged,” says a travel agent, a veteran in the trade.

While some North American air carriers have merged the fuel surcharge with their basic fare, many Asian and European airlines are still playing tricks both with the revenue collection agencies as well as passengers.

British Airways, for example, advertises a fare of Rs 33,000 on the New Delhi-New York-New Delhi sector in Q (queen’s class). But when one actually buys the ticket, one is quoted a price of Rs 41,375.

It is explained to the passenger that on a basic fare of Rs 33,000, there is a fuel surcharge (YQ) of Rs 5936. The airline pays neither service tax on this fuel surcharge nor any commission to the travel agent. As such, this money goes straight to the kitty of the airline.

Even if one wants to buy this ticket by doling out fuel surcharge as well, he or she does not get a seat. A careful study of the central reservation system or the seat availability on the system, one hardly finds any seat being offered in the Q class.

Invariably, passengers end up buying tickets in higher categories. Against a quoted price of Rs 41,375, the minimum one pays to get on a BA flight will be around Rs 45,000 or more.

Just offering a fare against non-existent seats is in violation of the MRTP Act.

Similarly, Japan Airlines publicises a fare of Rs 30,000 for the Delhi-Vancouver-Delhi sector. The actual cost of the ticket works out at Rs 51,500 as a passenger is required to pay Rs 12,500 as fuel surcharge on which the airline pays neither service tax nor commission to the agent.

On the other hand, some North American airlines have costlier tickets for the Delhi-New York-Delhi or Delhi-London-Delhi sectors. Continental Airlines, for example, charges a basic fare of Rs 44,570 on the Delhi-New York-Delhi sector with zero fuel surcharge. The total cost of the ticket comes to Rs 47,000.

Are passengers or intending travellers misled by these advertisements? “Yes”, say the insiders of the trade, maintaining that it is like saying flying to London for Rs 1,100. For circumventing the law, the airlines will put an asterisk on the fare saying conditions apply. These conditions will include the levy of fuel surcharge and other applicable taxes.

This “malpractice” has now percolated down to the domestic air carriers also. One private airline has offered a promotion fare of Rs 6 on the Chandigarh-Jammu sector. The fare carries Rs 700 as fuel surcharge besides Rs 500 as airport tax. The carrier is not expected to pay any service tax on fuel surcharge.

Now many domestic carriers have also introduced fuel surcharge at a uniform rate of Rs 700 per passenger for each sector travelled by him or her.

Variation in the excursion fare on international sectors is tremendous. Two passengers seated next to each other may have paid different fares for travelling to the same destination.

The earlier system of each international airline operating out of India getting its fares approved by the Director-General of Civil Aviation was discontinued a long time ago. As such, the air carriers have been not only circumventing the law but also misleading and fleecing passengers, maintain the insiders of the trade.

No one except the international air carriers are the beneficiaries.