Duty on aircraft, spares import likely to hit aviation sector

FE Team | Published: July 03, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Naim-Ul-Karim
The imposition of 10 per cent customs duty on import of aircraft and spares in the fiscal budget 2007-08 year will affect the country's aviation sector.
Sources in aviation sector said state and private owned airliners might have to increase their airfare by 10-12 per cent because of this new levy.
"The imposition of custom duty on import of spares will increase our cost of operation by minimum 10-15 per cent," Matin Chowdhury, customs consultant of the GMG Airlines, country's leading private sector airline told the FE.
The passengers will not choose the state-owned and private local airlines, as their airfare will be higher than those of the foreign airlines, sources said.
But, a high official of Biman, said the imposition of customs duty will not affect the national flag carrier as it enjoys bonded warehouse facilities.
"Even if there is any nominal increase in airfare, Biman's business will not be hampered as we are still offering lower airfare than others," he further pointed out.
Sources said considering the growth of aviation sector in the country, government imposed zero tariffs on aircraft and spares import though there was a 5.0 per cent custom duty until fiscal 2004-05.
Matin Chowdhury said their market promotion is likely to be hampered due to imposition of customs duty on import of spares.
"We have almost completed the documentary processes to start operation to some new destinations like Bahrain, Singapore, Karachi, Dubai, Mascot and Kuwait, but the imposition of duty has caused us to re-think in this case," he further said.
Chowdhury said, "As we do not yet have the bonded ware house facilities, the levy is likely to affect our existing business adversely."
Mentioning the imposition of custom duty as another blow, a knowledgeable source said they are already facing problems in importing aircraft, as there is no specific policy in this connection though the government has allowed import of four-year-old motor vehicles and 25-year-old ocean going vessels.
"We have to pay 10 per cent penalty for import of any second hand aircraft as there is no specific policy in this connection in the import policy."
When asked, an NBR official said it is a government decision and they have nothing to say.