Patna, June 17: The era of discounted air tickets could come crashing down once Goods and Services Tax (GST) comes into existence from July 1.

Nearly all airlines, including Go Air, IndiGo and SpiceJet, recently slashed airfares. IndiGo's airfares dipped to as low as Rs 899. Spicejet offered tickets at Rs 849 on some routes. GoAir too offered similar discounts.

But once GST is implemented, air tickets may no longer remain cheap, said a GoAir executive in Patna. Rates under the new GST regime can cause airfares to rise, he said adding: "This despite tax rate for economy class tickets being lowered to 5 per cent under GST." So, while economy class fliers would remain largely unaffected because of a marginal cut in tax, business class travellers will have to shell out 12 per cent against 8.4 per cent now, the executive said.

Another reason fares could rise is because airlines cannot claim credit on aviation turbine fuel (ATF) under GST.

Currently, airlines claim cenvat (central value added tax) credit on the central excise duty for fuel. But they will lose it, as petroleum products including ATF are outside GST's purview. "The costs incurred by the aviation industry will be higher," the GoAir executive said.

Besides, airlines will be taxed for importing spare parts and aircraft lease rentals. These are not taxed right now. The rising costs borne by the industry will in all likelihood be transferred to travellers by hiking airfares, he said.

IndiGo station manager Rupesh Singh said: "Under the new tax regime, direct international flights will be more expensive than flights with multiple halts as the tax will be levied in the first leg of the flight journey." He also said that any new tax on the aviation industry, might drive fares up. Other airline executives elaborated that since GST would be applicable from embarkation point, direct international flights may be dearer while stopover flights could cost less. Travel agent Atul Kumar confirmed the fears.

Thus, rising fuel costs, growing competition in the aviation industry and end of credit on ATF for airlines can spoil the party that began with tax cut for economy class and abolition of service tax, as GST on tickets is higher than the current service tax.