No takers for Praful Patel's plea to rescue airlines
June, 13th 2008
No respite seems to be in the corner for domestic carriers. The civil aviation minister Praful Patels meeting with Prime Minister Manmohan Singh on Wednesday failed to bring any relief package to airlines. Mr Patel will now meet the empowered committee of state finance ministers on May 16 and convince them to bring down sales tax on aviation turbine fuel to 3%. On account of high jet fuel price, airlines have been bleeding and expected to register a combined loss of Rs 8,000 crore in 2008-09.
We highlighted the concerns of aviation industry to the Prime Minister and he was sympathetic to the financial health of airlines. We raised the issue of giving aviation turbine fuel (ATF) the declared goods status. But, as sales tax is a state subject, it would not be a proper gesture to so by the Centre. We would meet the state finance ministers in the next few days and pursue the issue, Mr Patel said.
Airlines have warned that if the government doesnt take necessary step to reduce ATF price, they would be left with no choice but to prune the operation.
Jet fuel price, which till recent past, contributed 40% of the total operating cost of an airline now contributes 50% of the total input cost due to soaring prices.
The aviation industry is suffering heavy losses primarily due to unprecedented increase in fuel prices. It has become unsustainable and tax relief from the government along with rational thinking and pricing can alone provide relief, Kingfisher Airlines promoter Vijay Mallya said following a meeting between the chief executives of various carriers and Mr Patel.