Budget pushes airlines into dejection zone

Lack of sops in the 2008 Budget has pushed loss-laden airline industry into dejection zone, but civil aviation minister Praful Patel continues to be hopeful of getting them a decent deal by pursuing states to reduce sales tax on aviation turbine fuel (ATF). The civil aviation ministry had sought inclusion of ATF in the list of declared goods so that states cannot levy more than 4% sales tax.
With the 2008 Budget remaining silent on the issue, the airline industry's hopes of lower input costs stands dashed.
Domestic airlines are operating under extreme margin pressure, thanks to stiff competition, leading to low airfare and hence lower yield. The situation is more aggravated on account of high fuel price which is nearly 40% of an airline's total operating cost. In view of the high fuel prices, airlines have been working on uniform fuel surcharge despite their competition.
In a pre-budget communication to the civil aviation ministry, a finance ministry official had said that ATF cannot be added to the list of declared goods without building consensus among state governments.
Civil aviation minister Praful Patel, who had several meetings with finance minister P Chidambaram in the run up to the 2008 Budget, is still hopeful.
02/03/08 Nirbhay Kumar/Economic Times

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Categories: Indian Aviation- In General Mar 2008