Crisis-hit domestic airlines like Kingfisher and Air India could look forward to easing in jetfuel prices which account for 40% of their operating cost. The aviation ministry has proposed a set of measures, including restructuring of central levies on aviation turbine fuel (ATF) and easing of rules.
Local carriers pay as much as 60% higher price for lifting fuel compared to what airlines pay in Kuala Lumpur, Singapore and Bangkok. The aviation ministry wants the government to allow airlines directly import jetfuel to save on costs.
?The state governments after repeated requests have not changed their position on reducing sales tax on ATF. The Centre in this case may bring down custom and excise taxes
on fuel,? said a ministry official. While the average sales tax on ATF is 25% the overall tax incidence is nearly 35%.
The ministry has also decided to approach the petroleum ministry for looking into the issue of alleged cartelisation by public sector oil companies like IOCL, BPCL and HPCL in fixing ATF prices. While IOCL sells jetfuel for R64,622.34 a kilo litre the other major public sector fuel retailer sells it for R64,622.33 at the nation?s busiest, Delhi airport.
?There is no transparency in ATF pricing due to monopoly by the three public sector oil companies. These companies are managing the entire jetfuel sales in the country. While the government has opened the space for private retailers their share is still very marginal. There is just not competition in selling jetfuel,? Centre for Asia Pacific Aviation (Capa) India head Kapil Kaul said.
The Prime Minister’s Office had earlier this month asked the aviation ministry to suggest ways for rationalising taxes and levies on jetfuel following the top airline bosses meet with the Prime Minister Manmohan Singh asking concessions from the government.
The airline industry is estimated to lose upto R15,000 crore in 2011-12 mainly due to high fuel price and below-the-cost pricing by carriers.
The International Air Transport Association (IATA) director-general and CEO Tony Tyler last week said that Indian carriers have to pay very high fuel prices and it was penalising the sector.
