ATF at global price can help airlines fly into black

New Delhi: The government could turn the airline industry profitable overnight by reducing domestic aviation turbine fuel (ATF) prices to international levels which are 65% cheaper. The Federation of Indian Airlines (FIA) has identified high fuel prices as a key reason for the red ink splashed on balance sheets of many major airlines and emphasised that bringing domestic prices at part with international rates would lead to a 25% increase in bottom line of airlines.
Calling for uniform value-added tax (VAT) of 4% on ATF in all states across the country, FIA has called for — in a recent communication to the government — halving of excise to 4% and reduction in customs duty. The FIA’s assessment is significant since most Indian airlines — barring the government carriers — have been making losses during recent years. The scenario would undergo a sea change if fuel price is rationalised in line with the long-standing demand of Indian airline companies, the association feels.
The base price of ATF should be reduced and public sector oil companies — which now have monopoly over supply of aviation fuel in the country — should make pricing transparent, says the FIA paper.
10/05/07 Economic Times

To Read the News in full at Source, Click the Headline

Categories: General Aviation May 2007