Airlines mull flexible fuel cess to offset losses

Thiruvananthapuram: Airlines mull flexible fuel cess to offset losses
Hit by soaring fuel prices, the aviation industry is mulling a differential fuel surcharge based on the value-added tax (VAT) rates in each state.
“Airlines will not survive if the cost of aviation turbine fuel (ATF) remains so high and competition brings down fares,” said Air India Chairman and Managing Director V Thulasidas.
The proposal was put forward at an all-India civil aviation meeting attended by ministers and senior officials from various states.
“In some states, sales tax or VAT on ATF is as high as 30-35 per cent. I said at the meeting that airlines would be forced to go for a differential fuel surcharge. We will have to close down if there is no matching hike in air fares,” he said.
The Air India chief said the states that charged lower tax rates for ATF would face a lower fuel surcharge. ATF cost in India accounted for 40-45 per cent of airlines’ expenditure compared with 18-20 per cent abroad, he added.
01/02/08 Press Trust of India/Business Standard

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Categories: Indian Aviation- In General Feb 2008