Airlines are planning to reduce fares in response to the removal of 7.5 per cent Value Added Tax (VAT).
The suspension of VAT from air fares took effect from January 1, 2021, as part of incentives contained in the Finance Act 2020.
Airline operators told newsmen yesterday that they have received the directive on VAT removal from the government, but they are waiting for the Federal Inland Revenue Service (FIRS) to implement the directive before the low fares regime comes into operation.
According to reports, fares that were around N90, 000 for a one-way trip on some routes, could come down to as low as N27, 500. Possible reduction, an operator hinted, would take effect in the weeks ahead after airlines have enjoyed the huge passenger traffic on the return leg for the end of year festivities.
Spokesman of Dana Air, Kingsley Ezenwa said airlines were excited over the suspension of VAT, which he said should occasion considerable reduction in air fares.
The substantial reduction in air fares might not be realisable, because even with the suspension of 7.5 percent VAT on fares, airlines were still grappling with oscillating exchange rate as the airport authority moves to increase Passenger Service Charge (PSC). Currently, airlines are charging from N27, 500 to N38, 800 on the Lagos-Abuja route. Airlines are also charging from N27, 500 to N42, 000 on the Abuja-Lagos route.
