Civil Aviation Minister Praful Patel said on Wednesday his ministry has sought declared good status for aviation turbine fuel (ATF) to prop up the crippled finances of domestic airlines.
Patel led a delegation of CEOs of different airlines, state-run and private, and sought Prime Minister Manmohan Singh's intervention to help bail out an industry in the red due to the unprecedented rise in jet fuel prices.
Several airlines have been forced to cut down the number of flights, and some are even finding it difficult to pay their employees.
The declared good status would lead to a uniform tax of three per cent on ATF. Currently, states levy varying sales tax on the commodity. While Maharashtra, Gujarat and Madhya Pradesh levy sales tax of 30 per cent and more, other states levy lower taxes.
The Centre has its own compulsion, and in a federal structure we cannot unilaterally decide to grant declared good status to ATF. The states opinions have to be sought before we take a decision, Patel told reporters after an hour-long meeting with Singh.
Patel said the issue of high sales tax on ATF would be taken up in the meeting of the Empowered Group of State Finance Ministers slated for next Monday.
Jet fuel prices have gone up by 50 per cent since January. In Delhi, ATF prices went up from Rs 45,495.82 per kilolitre in January to Rs 66,227.08 per kilolitre in June. Patel said the airlines industry would incur a loss of nearly Rs 8,000 crore in the current financial year on account of high ATF prices.
Patel asked airlines to rationalise fares and discipline themselves if they wanted to continue in the business.