The aviation industry on Thursday welcomed the government's decision to reduce excise duty on aviation turbine fuel and abolish air travel taxes, saying it would lead to a boom in air traffic within the country and abroad.

Thanking Prime Minister Atal Bihari Vajpayee and Finance Minister Jaswant Singh for the move, Civil Aviation Minister Rajiv Pratap Rudy said it would go a long way in making air travel affordable.

Rudy hoped that the announcement was "just the beginning on road to a bright future for the civil aviation sector in the country."

Sources in the leading domestic airlines said the decision would lead to a slash in the airfares as over 35 per cent of the travel costs were due to the prices of ATF and the taxes on it.

Besides reducing excise duty on ATF from 16 to eight per cent, the government has announced the abolition of inland air travel tax , which was 15 per cent of the fare, as well as foreign travel tax of Rs 500 per passenger.

Welcoming the move, industry sources said it had been their long-standing demand that all taxes on ATF be abolished and have been moving the Centre and state governments to abolish or drastically reduce excise and sales tax to at least the level of four per cent as had been done by Andhra Pradesh.