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Patel moots cut in airport charges
June, 25th 2008

Civil Aviation Minister Praful Patel today said that airports need to give bleeding Indian carriers some relief by decreasing landing and parking charges.

He said this in his keynote address at the Business Standard Open Sky Summit 2008 held here today. Airport charges in India are 50-60 per cent higher than global airport charges and account for over 12 per cent of an airline's cost.

Patel, however, added that his ministry has not yet initiated any talks with airports on this issue.

"This is one form of relief that can be looked into, along with a fall in sales tax on aviation turbine fuel levied by states and a decrease of central levies," he said.

At the current rate, the Indian aviation industry is expected to report a loss of almost Rs 8,000 crore during the current financial year. According to the minister, over half of it, around Rs 4,500 crore, will result from higher ATF prices.

Patel said that ATF prices need to be cut by 50-60 per cent to bring them at the level of international prices. This, he said, would reduce the losses of Indian airlines by almost half.

Forced to sell automobile fuel below cost, state-owned oil marketing companies have raised ATF prices sharply to reduce their losses. The high sales tax levied by states has only made matters worse.

"If high sales tax on ATF impacts air connectivity within the country, several other aspects of growth will also be affected. Our good intentions have not been understood by the states so far," Patel said.

According to government sources, the empowered committee of state finance ministers met at Srinagar yesterday and decided not to reduce sales tax on ATF for the time being.

Patel's suggestions were welcomed by industry representatives at the summit. "If these two measures are taken, I am sure we will be out of the red soon," said a Simplifly Deccan executive.

However, private airport developers were non-committal on Patel's plea to reduce airport charges.

Speaking about how airlines were coping with the current crisis, Patel said that in a bid to be more competitive, Indian carriers had added to their woes by selling tickets below their costs.

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