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Centre to persuade states to lower sales tax on ATF
July, 15th 2014

The Centre is to make another attempt to convince states on the need to bring down the operating costs for domestic airlines.

With this objective in mind, Ashok Gajapathi Raju, the newly appointed Union Civil Aviation Minister, has called a meeting of civil aviation ministers of the states and union territories here on August 21.

A senior officials of the Ministry told Business Line that at the meeting another attempt will be made to convince the states to bring down the high sales tax that some charge on aviation turbine fuel. At the moment, the sales tax on ATF varies from 4 per cent to over 30 per cent. The Centre will make an attempt to explain the multiplier effect of a vibrant aviation sector to the economies of the states.

"This Government is keen that there is healthy competition in the sector. We do not want another Kingfisher like situation as this could lead to thousands of people being on the road," the official said.

The Centre is also looking at other ways to revitalise the sector including restarting the process for modernising the airports in Chennai, Kolkata Ahmedabad, Lucknow and two other cities through the involvement of the private sector through the public-private partnership route.

The modernisation of the six airports which was halted when the General Elections were announced is likely to get another lease of life with Secretary Civil Aviation, Ashok Lavasa, scheduled to soon chair a meeting on drawing up a model concession to take forward the process.

Officials, however warn that it is still to early to say by when and by which route these six airports will be modernised.

Besides, to promote regional air connectivity, the Government has decided to construct low cost airports in tier I and tier II cities so as to give a boost to the economy there.

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