Gotipua dancers perform during the inauguration of the new terminal at Biju Patnaik Airport in Bhubaneswar on Tuesday. PTI and picture by Sanjib Mukherjee

Bhubaneswar, March 5: Union civil aviation minister Ajit Singh inaugurated the new domestic terminal of the city airport in a fitting tribute to an expert pilot-turned-politician Biju Patnaik, whose 97th birth anniversary was celebrated today.

Singh assured the state government that the civil aviation ministry had plans to connect Bhubaneswar with the international airline network. After commissioning the new domestic terminal, the process to start operations such as customs and immigration will be initiated at the old terminal of Biju Patnaik Airport for international operations.

He, however, urged the state government to reduce the value added tax (VAT) on the aviation turbine fuel (ATF) so that more domestic, as well as international operators, would be interested to connect to Bhubaneswar.

Singh also gave the example of VAT reduction by the Chhattisgarh government for Raipur airport, which has resulted in a five-fold increase in revenue because of economic growth in sectors such as travel, hospitality and tourism.

On his part, chief minister Naveen Patnaik announced that the VAT on ATF would be brought down to five per cent from the existing 20 per cent. He, however, requested Singh to expedite the process to accord international tag to the city airport.

“The state government is willing to reduce the ATF surcharge for international flights touching Bhubaneswar and for all domestic flights to and from Bhubaneswar, which touch at least one more airport located in Odisha,” said Naveen.

Senior officials of Airports Authority of India (AAI) said that the operations from the existing terminal building would be shifted to the new domestic terminal within a week as the entire process had to be done in phases.

Last November, secretary of the Union ministry of civil aviation K.N. Shrivastava met the chief minister and the chief secretary to take up the ATF VAT issue.

A cut in ATF tax could make Bhubaneswar airport a preferred refuelling hub as in the case of Dubai or Kuala Lumpur. It could be a hopping destination. It will also increase the role of the city airport as a centre for maintenance repair and overhaul activities in the future.

India has witnessed a phenomenal growth in air traffic as an outcome of the “open sky” policy, making the country one of the fastest-growing aviation markets in the world.

Estimates suggest that domestic air traffic will touch 336 million passengers each year over the next 10 years and the international traffic will exceed 84 million passengers each year.

In 2011-12, the airport was used by 12.72 lakh passengers as compared to 10.62 lakh the previous year.

Singh also hinted at an equitable and inclusive civil aviation policy of connecting smaller towns and cities and difficult areas. “Our ministry is identifying the most suitable low-cost viable models for development of smaller airports to enhance regional connectivity. We are gearing up to develop the Jharsuguda airport and upgrade the runway so that A320-type aircrafts can land there,” he said.