After having resorted to hike airfare, following a 14% rise in aviation turbine fuel (ATF), airlines have sought sops from the government to offset losses. Federation of Indian Airlines (FIA) has made a strong pitch for treating ATF as declared goods, in order to rationalise the fuels? price. If done, ATF will attract a uniform 4% sales tax across the country. Currently, states impose levies ranging between 4% and 32% on ATF.
In its fresh plea to the petroleum minister Murli Deora, FIA has argued that airlines were running a severe risk of dampening passenger market growth in India, by fast making air-travel out of the reach for a significant portion of the market which was fuelling the sector?s growth.
?ATF is the fastest growing petroleum product for the Oil PSUs and its sale has more than doubled between 2003 and 2006. There is clearly a stakeholder interest for the oil companies to see a healthy and an expanding aviation market. A focus on revenue maximisation alone by the oil companies will jeopardise India?s aviation growth,? FIA said. Justifying airfare hike, FIA said the total additional cost burden of ATF hike would be around $270 million on an annualised basis for the whole industry.
FIA has mentioned that ATF prices in Mumbai were Rs 41,105 per kilolitre in Oct 2007, against Rs 23,064 per kilolitre in Singapore. This is about 78% higher. The difference is 97% in the case of Kolkata. ATF rates for domestic operations in India are now priced 70%-90% higher than international price. This differential was 60-80% till around 6 months back. In case of an increase in ATF price on December 1.
