NEW DELHI: The falling rupee is not the only villain making the foreign holiday package more expensive. From July 1, travel agents organizing package tours for foreign destinations have started levying 3% service tax on hotel booking, sightseeing tickets, taxi and other travel arrangements being made to ensure a smooth stay for their guests abroad.
Earlier, service tax was levied only on air tickets. Now with the expansion in service tax net to newer areas, package tours abroad have become more expensive. Benson Samuel of Delhi-based Riya Travels said: “This has affected prices. For example, a land package tour price to Singapore in a three-star hotel has increased from Rs 20,976 per person on twin-sharing basis to Rs 22,013. Tour cost for Swiss towns of Interlaken and Lucerne in a similar rated hotel has gone up from Rs 38,924 per person on twin-sharing basis to Rs 40,848 per person on twin-sharing basis.”
Mohit Gupta, Make My Trip’s chief business officer (holidays), said: “The impact has been a straightforward 3% on non-air travel component. This new levy could not have come at a worse time.”
International airfares have been affected due to Indian carriers reducing flights. While Kingfisher has stopped all its foreign flights, Air India’s international flights have been crippled by the pilots’ strike. While overall economic conditions have slowed down domestic air travel, international still remains strong. With demand up and supply down, airfares have hit the roof.
As a result, said Gupta, people are now looking for cheaper holiday options. “Holidayers are now shifting destinations. Many people planning a holiday in the West are now going to Southeast Asia. People who earlier found Southeast Asia in their budget are now shifting to domestic destinations,” he said.
A senior airline official said: “The holiday season is over and now we may see dip in international travel due to subdued business sentiment. It is a fight for survival for us as revenue is now looking down but costs are going up. The costs have to be passed on to the consumer who is flying more expensive now. The problem has been compounded by the levy of new fees for all flyers – whether incoming or outbound – at Delhi airport and hiking of charges by 346%.”