Airlines in India have further cause to rejoice after the huge price cut in Aviation Turbine Fuel (ATF) announced yesterday. The government of Maharashtra, the state with the maximum number of aviation operations in India, has indicated a reduction in the draconian 32 per cent it charges as sales tax on ATF. (See: Aviation turbine fuel prices slashed by over 16 per cent)

Chief minister Vilasrao Deshmukh gave this assurance to a delegation of Indian Airlines' Federation during a meeting at the seat of government recently. Kingfisher Airlines chief Vijay Mallya, who was present at the meeting, said that the government should reduce sales tax on aviation fuel as it is causing losses to airlines.

"When the fuel price was 40 dollars per barrel, the sales tax rate on it in Maharashtra was 32 per cent. Now, when the price is 130 dollars per barrel, sales tax is levied at the same rate," Mallya said at the meeting, convened by Deshmukh to discuss improvement of air connectivity in the state.

"Reducing sales tax on aviation fuel is essential if airlines are to take the initiative to increase air traffic in Maharashtra," Mallya said, adding Andhra Pradesh and Kerala have taken steps to cut Sales Tax on the aviation fuel.

Reacting to the delegation's demand, a release issued by Deshmukh's office said, "To reduce the financial burden of airlines, the state government would think of reducing the sales tax levied on fuel prices.''