Bhubaneswar: In a setback to Odisha aviation industry, which had looked promising after the re-launch of Air Odisha’s intra-state flight operations in January this year, the home-grown carrier on Saturday announced withdrawal of its services from March 21.
The homegrown carrier attributed the decision to the State government’s failure to keep its promise on exempting value added tax (VAT) on air turbine fuel (ATF).
“The (Air Odisha) services will be withdrawn as we are not getting the operational subsidy promised by the Odisha government. In the morning today, we stopped the Sambalpur-Bhubaneswar and Rourkela-Bhubaneswar flights due to this. We have received instruction regarding this from our head office,” Joseph Nayak, an official of Air Odisha, said.
“Services of Bhubaneswar-Sambalpur, Bhubaneswar-Jeypore and Bhubaneswar-Rourkela will be withdrawn effective March 21,” Nayak further said.
The announcement came exactly two months after the carrier undertook its maiden flight to Sambalpur from Biju Patnaik International airport here.
Though it is not known whether any special announcement was made by the State government in favour of Air Odisha to push for intra-state operations as part of its efforts to strengthen aviation network in the State, it has already slashed VAT rate on ATF to 5 per cent from the earlier 20 per cent from December 1, 2013.
In June last year, the Odisha government had announced that under the provision of Section 17 A of the Odisha Value Added Tax Act, 2004, it will exempt VAT from ATF for international flights, in a bid to attract foreign airlines to begin commercial operations in the state.