Airlines hit a rough patch

With aviation turbine fuel (ATF) being the highest priced petroleum product, the impact of the petroleum prices can well be imagined in the bottom line of the airlines. Adding to the financial mess seems to be the continuing fare war in the international and domestic sectors. As such, most airlines appear reluctant to raise the fares even now.
Air India Chairman and Managing Director V. Thulasidas is on record noting that the airline incurred a loss of Rs. 700 crore last year on account of the rising fuel bill. The loss was bound to climb further this year, when international crude prices hit the $100 a barrel rate but steadied in the 90s.
At a recent seminar in Chennai, Air India chief and Jet Airways Chairman Naresh Goyal made out a strong case for a reduction at least in the taxation of ATF.
In 2006-07, scheduled airlines in the country incurred a combined loss of around Rs. 2,000 crore, because of the competitive pricing policy they pursued.
ATF prices are said to be the highest in India, and in some States, airline officials say, they are twice that of the global rates. This is because of the higher tax rates and the Value Added Tax.
11/02/08 V Jayanth/The Hindu

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Categories: Indian Aviation- In General Feb 2008