Air transport fares may soon take a downward shoot as airlines are planning to reduce fares following the removal of 7.5 percent Value Added Tax, VAT.
It would be recalled that the suspension of VAT from airfares took effect from January 1 this year as part of incentives contained in the Finance Act 2020.
Airlines currently charge between N27,500 to N42,000 on the Lagos-Abuja route, while on the Lagos-Port Harcourt route, fares are going for between N42,000 and N80,000, and between N29,000 to N42,000 on the Lagos-Kano route.
Airline operators having acknowledged receiving the directive on VAT removal from the government, however, said they are waiting for the Federal Inland Revenue Service, FIRS, to implement the directive before the low fares regime comes into operation.
While they have hinted that the possible reduction could take effect in the coming weeks, airlines have arguably enjoyed huge passenger traffic on return flights for the end of year festivities.
According to Kingsly Ezenwa, Spokesman of Dana Air, airlines are excited over the suspension of VAT, which he said should occasion a considerable reduction in airfares.
Another official of an airline added that a substantial reduction in airfares might not be realizable because even with the suspension of 7.5 percent VAT on fares, airlines were still grappling with the oscillating exchange rates as the airport authority moves to increase Passenger Service Charge, PSC.
In 2018, the federal government had suspended five percent charges on imported commercial aircraft and spare parts through an Executive Order, but the FIRS claimed to be unaware of such a directive, hence it was never implemented leaving airlines confused on the pronouncement.
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