Will airlines absorb 6% GST for local tickets? Same hike for passenger service charge too

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KUALA LUMPUR: Air tickets are likely to cost about 6% more for local destinations if airlines do not absorb the extra cost with the implementation of Goods and Services Tax (GST) next year.

As for international tickets operated by local airlines, they will cost only 1% more under the new tax regime.

“Domestic flights will be most affected as ticket prices will be subject to the GST standard rate, whereas international flights are zero-rated,” Maybank Investment Bank Research said in a report.

“It will be a challenge for the airlines to fully pass on the GST to consumers as a 6% higher ‘all-in’ ticket price is drastic and will have an impact on demand.

“Secondly, passenger service charge (PSC) for both domestic and international flights are subject to GST as well.”

Full report: http://www.thestar.com.my/Business/Business-News/2014/10/15/Local-flights-to-cost-more-Tickets-will-be-6-higher-with-GST-unless-airlines-absorb-extra-cost/?style=biz