Aviation is a key enabler of Pakistan’s economy. Pre-COVID, the sector supported 425,000 jobs and contributed USD2.8 billion to the country’s GDP. Instead of ensuring positive policies are put in place to encourage the growth in air traffic and travel demand, it is disappointing that the Federal Excise Duty (FED) on air tickets for international travel has been increased on 1 July, with the FED more than doubling in some cases.
Repeated FED increases will only dampen demand to Pakistan by increasing ticket prices. This will have devastating effects on the travel industry and the economy as a whole.
We urge the government to reconsider this decision, and prioritize the growth and development of Pakistan's travel and tourism industry.
Increasing the FED also contradicts with the FED Act 2005, and the Pakistan government’s commitments under ICAO’s guidelines and recommendations.
Not only did the government fail to engage the industry in consultations, it surprised the industry by giving three days notice for implementation. This is causing problems for passengers, airlines and the authorities.
There are many issues affecting the aviation industry in Pakistan, including blocked funds. The government needs to do a better job at supporting this industry that is vital to the people and economy.
