Patel to ease airline fuel price load

New Delhi: Civil aviation minister Praful Patel is trying to help domestic airlines offset their losses due to higher jet fuel prices. Besides proposing rationalisation of taxes and duties on aviation turbine fuel (ATF) to the finance ministry, Mr Patel has also written to chief ministers asking them to bring down sales tax imposed on ATF to the ‘declared goods’ rate of 4%. Sales tax on ATF levied by various states vary from 20% to 35%.
“The significant challenge for our ministry is to ensure that our airlines remain viable and functional. This would be a very difficult task unless the state governments also lend a helping hand by reducing the sales tax on ATF,” the civil aviation minister said in a letter to chief ministers.
Jet fuel accounts for nearly 40% of the operating cost of Indian carriers. As against it, fuel cost contributes just 20% to the overall operating cost of international airlines making Indian carriers less competitive compared to their foreign counterparts. High fuel price has also caused domestic airlines huge operational losses. In the last two years alone, ATF price has more than doubled to Rs 42,796.74 per kilolitre.
Though the revenue from sales tax on ATF contributes only 0.5% to 2% of the total sales tax collection in most of states, the growth in real terms has been significant.
26/12/07 Nirbhay Kumar/Economic Times

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Categories: General Aviation Dec 2007