Renewal of tax exemptions sought for Mysuru airport

In these times of lockdown and suspension of flights, it would bring down overhead cost of keeping the airport operational

Stakeholders including the Airports Authority of India (AAI) have sought a renewal of tax exemptions and other subsidies from the State government to the Mysuru airport which expired in September 2020.

Coupled with plummeting air traffic and cancellations or suspension of flight services due to the lockdown and the pandemic situation, the withdrawal of tax exemptions is adding to the overhead cost of keeping the airport operational.

Sources told The Hindu that the State government had extended concessions to the Mysuru airport with regard to electricity and water apart from exempting it from remitting property taxes to the local body. The concession was initially extended for a period of 5 years with effect from October 6, 2005, following an MoU between the Government of Karnataka and AAI.

The concessions were renewed again with effect from October 1, 2015, for another 5 years. The tax waiver and free electricity and water charges were to help minimise the operational cost of the fledgling airport which was developed by the AAI after spending nearly ₹82 crore.

Once this lapsed, the AAI wrote a letter to the government on October 7, 2020 to extend the exemptions for another 5 years commencing from October 1, 2020, on the grounds that the revenue generated was less than the expenditure incurred to provide essential services at the airport mainly due to the subsidies provided as per the Regional Connectivity Scheme (RCS) and the challenges imposed by the outbreak of COVID-19.

The State government rejected the proposal and issued an order in February this year to the effect, and decided not to extend the tax exemption and other subsidies.

However, sources in the AAI said that this was a routine issue consequent to the withdrawal of exemption, and that fresh efforts are being made to secure another renewal and the matter was being pursued at the highest level. But so far it has not yielded any results. In the meanwhile, the monthly water and electricity charges besides other cess due to the local bodies are being remitted, adding to the operational cost of the airport whose originating passenger traffic has dwindled.

Though the redeveloped airport was inaugurated in 2010 flight operators did not evince interest in the route and hence air connectivity remained a chimera. Besides, the runway length at 1740 metres was restrictive and was suitable to operate only ATR type of planes providing short-haul flights. But the facility gained wings with the launch of regional connectivity scheme under UDAN and there were 14 operations a day connecting Mysuru with 7 other cities till recently.

However, the pandemic clipped the wings of the airport again and stymied its plans for runway expansion and introduction of additional flights. The withdrawal of tax concessions is another setback in the airport’s efforts to keep itself soaring.

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