Russian government supports VAT cut for regional flights

ROSTOV-ON-DON, Mar 28 (PRIME) -- The Russian government has supported cutting value-added tax (VAT) for regional flights that bypass Moscow, Yevgeny Chudnovsky, CEO of multi-industry holding Renova Group’s airport operator Airports of Regions, said late on Monday.

“This is a serious leverage, which, as we see it, will allow us to balance the chances between regional flights and network flights through Moscow, which prevail today. It will also provide an opportunity for regional hubs and regional carriers to hope for development and maybe cut financing envisaged by programs of the federal budget. We think that the initiative will improve the industry in general,” he said.

The measure will help St. Petersburg airport Pulkovo to create a hub similar to that in Moscow, and develop regional airports in the cities of Rostov-on-Don, Yekaterinburg, Novosibirsk, Khabarovsk, and Vladivostok. It will also reroute some excessive flights from Moscow airports to increase competitiveness, he said.

Vitaly Natsev, co-owner of Vnukovo International Airport, supported the initiative.

“The only thing here is that we all have a 10% VAT until January 1, 2018. The dangerous thing in the tax maneuver that we expect from the Finance Ministry is that they may cancel VAT for regional flights but increase VAT for Moscow and St. Petersburg to 18% next year. Our goal is not to let it happen, as it will hurt carriers that fly in Moscow and St. Petersburg,” he said.

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