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Aviation fuel may become ‘declared goods’ by year-end

Source : BUSINESS LINE
Last Updated: Sun, Nov 23, 2008 03:45 hrs
Praful Patel, Naresh Goyal

New Delhi: The Government hopes to be able to accord ‘declared goods’ status to aviation turbine fuel (ATF) being supplied to large commercial aircraft operated by domestic airlines by the end of the year.

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Speaking to newspersons on the sidelines of the Hindustan Times Leadership Summit, the Minister for Civil Aviation, Praful Patel, said that his Ministry was constantly in touch with the Finance Ministry and the Empowered Committee of the State Finance Ministers on the matter.

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“Before the end of the year we should have declared goods status for ATF. Domestic airfares should come down in the New Year.” The domestic airline industry has to pay sales tax varying from 4 per cent to more than 30 per cent on ATF that it uplifts in different parts of the country. The high level of taxation is often cited as one of the primary reasons for the losses which the domestic airline industry is reporting.

Some fly in, some fly out...

According ‘declared goods’ status to aircraft of more than 40,000 tonnes, like the Airbus and Boeing operated by all domestic airlines, will ensure that the industry pays a standard 4 per cent sales tax on ATF through out the country.

Airlines reject fare-cut demand

The Minister also asked the industry to look at the possibility of reducing domestic airfares as the global price of fuel was decreasing. “The Government is not immune to what the public feels. Perceptionally, the Government is trying to help the airline industry. Now with fuel prices coming down, you must match perception and that fares are coming down.” The Chairman of Jet Airways, Naresh Goyal, said that the airline will do whatever the Ministry and Minister want as “long as we remain profitable. I will certainly not like the company to close down.”

‘Govt constantly overtaxed aviation industry’

AI may lower fares

The Minister hinted that the state-owned Air India may look at reducing fares.

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“Air India need not think like other carriers. It knows its responsibility towards the public.” He also said that the Government planned to infuse Rs 1,200 crore as equity into Air India. The proposal will have to be cleared by several Government Ministries including the Finance Ministry and the Cabinet Committee of Economic Affairs before the funds can be provided.


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