Basic customs duty on jet fuel goes; IOC cuts price

New Delhi: The basic customs duty of five per cent on aviation turbine fuel (ATF) has been completely removed. The sale price of ATF has also been reduced by 15-17 per cent across the four metros.
This will help bring down costs of domestic airlines. In the near term, it will reduce their losses. In the medium term it may lead to fare reductions. This is primarily because fuel constitutes 45-50 per cent of the operating cost of most domestic airlines.
On Friday, Indian Oil announced that ATF will cost Rs 47.01 a litre in Delhi, down from Rs 56.44 a litre the previous month. Similarly, domestic airlines refuelling in Chennai will now pay Rs 51.89 a litre as against Rs 62.05 the previous month.
Citing various reasons including the rising cost of aviation turbine fuel, the full-service airlines levy a fuel surcharge of Rs 2,400 for sectors less than 750 km and Rs 3,100 for longer flights. Low-cost airlines charge Rs 2,250 and Rs 2,900 as fuel surcharge for short- and long-haul flights respectively.
But, despite the Government announcements, the industry held out no promises of cutting fares or reducing surcharges immediately.
31/10/08 Business Line

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Categories: Indian Aviation- In General Nov 2008