Finance ministers from India's states will on Monday consider cutting sales tax on jet fuel to 3 percent nationwide to help airlines facing large losses due to rising fuel costs, the civil aviation minister said.

Sales taxes are fixed by states without reference to the federal government, and aviation turbine fuel (ATF) is taxed by between 4-28 percent across the country.

Jet fuel makes up about 45 percent of an airline's operating costs, and the benchmark domestic price of ATF has risen nearly 46 percent since January to above 66,000 rupees ($1,540) a kilolitre as the cost of crude oil has surged to record highs above $130 a barrel.

"I have proposed a declared goods status (for jet fuel), with tax cut to 3 percent," Praful Patel, the minister, told a news conference on Wednesday, saying the measure would immediately reduce the sector's costs by 35 billion rupees.

The Indian airline industry is expected to lose 80 billion rupees in the year to March 2009, double that of a year ago, largely due to the surge in ATF prices.

"We have also asked the oil companies to consider a reduction in the base price of ATF," Patel said.

Patel, who was speaking after meeting the prime minister to discuss the sector, said he would meet the finance minister next week.