Cheaper aviation turbine fuel hopes crash at North Block

New Delhi: The Budget is unlikely to lift the spirits of the aviation industry. The finance ministry has decided against according declared good status to aviation turbine fuel (ATF), or jet fuel, in the Budget. The move would have reduced sales tax on jet fuel to a uniform 4% across the country.
Sales tax on the fuel varies in each state and in certain cases, it is as high as 24%. Domestic carriers are incurring losses due to high fuel bills, which constitute about 40% of airlines’ total operating cost.
In a recent communication to the civil aviation ministry, a finance ministry official said jet fuel could not be added to the list of declared goods without building a consensus among state governments. It said the empowered committee of state finance ministers has said states would strongly object to any such move of the Centre.
Considering the possibility of stiff opposition from states, the initial plan of announcing jet fuel as a declared good in the Budget had been dropped, a source in the government said. It is learnt that the civil aviation ministry has been asked to pursue the issue with individual states and create a consensus.
25/02/08 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Feb 2008