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Jet chief seeks lower sales tax on aviation fuel
October, 21st 2008

The Chairman of Jet Airways, Mr Naresh Goyal, on Monday met with the Finance Minister, Mr P. Chidambaram, to seek Central assistance in convincing State Governments on the need to lower sales taxes on aviation turbine fuel (ATF).

Currently, State taxes on ATF varies from 4 per cent to more than 30 per cent, and is being cited as one of the main reasons for the losses being incurred by the industry.

Jet Airways, like most other domestic airlines, has been badly affected by the rising price of ATF, which accounts for between 45 and 50 per cent of the operating cost of most domestic airlines. Although global crude prices have declined in the recent past, the cumulative impact of the rise in fuel prices previously could see the domestic airline industry report a loss of more than Rs 4,000 crore.

Sources indicated apart from the need of rationalising taxes on ATF, other fiscal measures to help the airline industry were also touched on at the meeting.

The industry has often complained about the high domestic price of aviation fuel.

At a meeting with the Prime Minister, Dr Manmohan Singh, in June industry leaders pointed out that while the Government provides 77 per cent subsidy on kerosene, 47 per cent subsidy on diesel and 29 per cent on petrol, the ATF rates for domestic operations were 60-70 per cent higher than international benchmarks.

To cut costs, Jet Airways had recently entered into an alliance with Kingfisher Airlines, the scope of which includes code-sharing on both international and domestic flights apart from looking at joint network rationalisation. It will also look at a joint fuel management strategy to reduce expenses, apart from working on cross-selling flight inventory.

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