Taxes on ATF dampen airlines’ profitability

Mumbai: Taxes on ATF in India are the highest in the world, making ATF in the country around 60% costlier compared to other places like Europe and South East Asia. The tax on ATF comprises central excise duty, education cess and sales tax that are levied by states. "For an average airline, the fuel tax burden is approximately 10.5% and 15% of revenues for a full service carrier and a low cost carrier, respectively. Coupled with the rise in ATF prices, this is a major profitability dampener,” said Gautam Sinha Roy, an analyst with Edelweiss Capital.
Aviation experts feel that while there is still no relief from the rising crude oil prices, the cost of ATF and air travel is expected to rise further since jet fuel costs constitute 42% of the air ticket price charged by airlines in India.
Sales tax in India varies from 4% in Jharkhand and Chattisgarh to 39% in Kerala. Interestingly, sales tax is typical only to India and is not levied anywhere in the world.
29/08/06 Neelasri Barman & Sagar Malviya/Financial Express

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