Global airline association urges Pakistan govt to take back FED hike on air tickets

The global trade association for airlines — International Air Transport Association (IATA) — has urged the Pakistan government to take back the increase in the Federal Excise Duty (FED) on air tickets for international flights.

Repeated increases in the FED are a violation of Pakistan’s commitments to the International Civil Aviation Organization’s policies and would reduce travel demand to Pakistan, it said.

The recommendation was made in a letter written by IATA’s Country Manager for Pakistan Feroze Jamall to Finance Minister Muhammad Aurangzeb dated July 8.

The IATA also urged the government to provide a six-month transition period for imposing the new FED charges if it cannot remove the increase.

While the new FED rates have come into effect from July 1, the IATA has recommended that the increase be reflected in tickets for flights from Jan 1, 2025, onwards.

The government has increased the FED to:

• Rs12,500 on economy and economy plus tickets
• Rs150,000 on club, business, and first-class flight tickets to Middle Eastern and African countries
• Rs210,000 on club, business, and first-class flight tickets to Europe
• Rs210,000 on club, business, and first-class flight tickets to the Far East, Australia, New Zealand, and Pacific Islands
• Rs350,000 on club, business, and first-class flight tickets to North, Central, and South America

Expressing disappointment at the government’s decision, the letter pointed out that under Pakistan’s FED Act 2005, the duty is only applicable to services provided or rendered in Pakistan.

Therefore, the FED should not be applied to international flight tickets, it said.

The IATA also said the increase was also in contradiction to Pakistan’s commitment to abide by the International Civil Aviation Organization’s policies and the Convention on International Civil Aviation.

States who have agreed to those policies are bound to make plans to eliminate all forms of taxation on the sale or use of international transport by air.

The policies also encourage countries to avoid imposing charges that discriminate against air travel compared to other international travel modes.