A recent analysis by industry body Assocham reveals that aviation turbine fuel (ATF) prices at Indian airports is much higher, compared with eleven other international airports across Asia, Europe and North America as on July 2009.
In India, ATF is priced lowest at the Hyderabad airport. Yet, it is 46% higher than Kuala Lumpur, where ATF is priced at Rs 22,800 per kilolitre. ATF, which is priced highest at Kolkata, is almost twice as expensive as that in Kuala Lumpur.
While the prices of ATF range between Rs 23,000- 26,000 at international airports, in India the cost is anything between Rs 34,000 -Rs 47,000 per kilolitre at Mumbai, Delhi, Bangalore and Kolkata airports. The airports with which comparisons are drawn in the study are Bangkok, Dubai, Hong Kong, Jakarta, Kuala Lumpur, Seoul, Singapore, Tokyo, London, Paris and New York.
Assocham president, Swati Piramal has taken up the case and has written to the government that the sustainability of the airline industry would be severely eroded if it is not recognised as a ?core industry?, which will ultimately lower taxes to 4%on ATF across India. Currently, taxes on ATF range from from a mere 4% in Andhra Pradesh to over 30% in several other states.
On the higher side, the sales tax rate on ATF is 28%-30 % in Karnataka, Bihar, Madhya Pradesh, Tamil Nadu and Gujarat, while it stands at 25% in Maharashtra, West Bengal and Himachal Pradesh. In Delhi, Goa, Haryana, Jharkhand, Chandigarh and some other states it is 20%, while in Jammu and Kashmir, Uttar Pradesh and Nagaland the tax stands at 21%. ATF consumption had gone up from 24,84,000 metric tonne in 2003-04 to 44,55,000 metric tonne in 2008-09. In August, the aviation industry has demanded a cut in sales tax rates on jet fuel. The Union Cabinet has set up a ministerial group to look into the high ATF prices. ATF charges account for over 40% of the total operational cost of airlines in India, compared with 20-25% globally.