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State Subsidies For Airline Companies
January 5, 2016 23:59

The Ministry of Transport proposed a zero rate of value added tax (VAT) on the sale of tickets for flights within the country, as the Minister of Transport Maksim Sokolov announced at a meeting on the development of internal tourism on Tuesday, January 5.

The words of the Head of the Ministry are quoted by TASS. “This stabilizes not only aircraft fleet in terms of the financial model of domestic traffic, but also gives an impetus to the development of tourism in terms of cheaper tickets” – the Minister stated. According to him, airfare on domestic routes grew by 5.6 percent in 2015 and amounted to an average of 6.5 thousand roubles.

The Ministry of Transport and the Ministry of Culture supported the proposal of selective application of the three-day visa-free stay of foreigners in tourist areas. The Ministry of Culture offers this regime to the tourists from the countries that have provided similar benefits to Russians, as the agency specified. Nevertheless, the participants of the aviation market predict that the rise in prices for airline tickets in 2015 will make up at least 5-10 percent for domestic routes and at least 10-20 percent for international ones.

The Ministry of Transport believes that the situation can be influenced by the extension of the mechanism of subsidizing air transportation and state financial support of the market. In late September the transport agency announced maintaining subsidies for airline companies for 2016-2017. According to the Ministry, the reduction of VAT on domestic air transportation down to zero will save about 20 billion roubles for airline companies.

Experts suggest that in 2016 the main holiday destinations in the country would be the Crimea and the resorts of the Krasnodar Territory. The determining factors for the choice of foreign destinations among Russians still are prices and comfortable flights.


Author: Anna Dorozhkina


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