Aviation turbine fuels worry

New Delhi: The civil aviation ministry proposal allowing airlines to directly import Aviation Turbine Fuel (ATF) has not brought much cheer to the Indian carriers as they feel the proposal lacks clarity in its present form.
Jet fuel prices in India are among the highest in the world mainly because of steep sales tax levied on them by state governments.
Sales tax on ATF varies from 4 per cent to 36 per cent in different states. Chhattisgarh charges the lowest sales tax of 4 per cent while that in Maharashtra, Karnataka and West Bengal is anywhere from 25 to 30 per cent.
For any airline, ATF constitutes about 40 per cent of its operating cost but due to very high sales tax, the cost for Indian carrier goes up to about 50 per cent, thus eroding their profit.
To facilitate cheaper jet fuel for the ailing aviation sector, civil aviation minister Ajit Singh has also written to the chief ministers of all states asking them to lower sales tax but the states have not responded ‘favourably’ to the request.
18/02/12 Samiran Saha/Tehelka

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Categories: Indian Aviation- In General Feb 2012