The aviation sector is, however, a gainer. The governments decision to reduce customs duty on aviation turbine fuel (ATF) by 5% is would reduce the rising fuel cost for the sector marginally. But domestic airlines, flying on a narrow profit margin, are in no mood to pass on the benefit to their customers.
It is a welcome relief, though its too little and too late. As of now we dont think the benefit will be passed on to the consumer as we are passing on only a part of the increase in our total fuel costs (around 35%) to passengers in the form of fuel surcharge, says Jitendra Bhargava, spokesman of Air India. Airlines are, however, not able to quantify their gains.
We will have to wait and see how significant is the impact on ATF price, says Partha Sarthi Basu, CFO, SpiceJet. The sector is more interested in a rationalisation of sales tax structure. The need is to reduce sales tax. In India, we are paying absurd price for ATF because of the taxes, which are on top of the high crude oil prices, says Jeh Wadia, MD, GoAir.