States should cut ATF tax

Civil Aviation Minister Praful Patel today appealed to all state governments to reduce sales tax on aviation turbine fuel to bring down the cost of airline travel.

"The high cost of ATF is largely because of sales tax that states levy. I urge all state governments cut the sales tax in order to gain a high volume of air traffic and income," he said.

Domestic airline companies have been demanding a reduction in ATF sales tax to reduce the burden of higher prices. It was also pointed out that such a reduction would help them to bring down operation costs at a time the ATF prices were on a rise.

The sales tax on ATF differs from 8 per cent to as high as 30 per cent among various states.

He was speaking at the concession agreement signing function with the Bangalore International Airport Company (BIAL) for building the new airport at Devanahalli in Karnataka over the next 33 months.

The airport will be constructed through private-public partnership, with the joint venture company comprising Karnataka State Investment and Industries Development Corporation (KSIIDC) and Airports Authority of India (AAI) as well as a consortium of Siemens, Unique Zurich and Larsen and Toubro.

While KSIIDC and AAI will hold 26 per cent equity in the joint venture firm BIAL, the private consortium would hold the remaining 74 per cent.

The total project cost of building the airport is estimated to be Rs 1,300 crore. The Karnataka government has provided Rs 350 crore soft loan to BIAL and would provide budgetary support of Rs 400 crore.

The concession agreement was signed by Civil Aviation Secretary Ajay Prasad, BIAL chief W Bischoff and Karnataka's additional chief secretary S Krishnakumar.

Observing that it was "not a happy sight" for foreign travelers to land at Indian airports, Patel said the modernistion and restructuring of Delhi and Mumbai airports would be given the highest priority as also the development of infrastructure at other airports in the country.

The new Bangalore airport would be constructed on a build, own, operate and transfer (BOOT) basis. The old Bangalore airport, operated by the Indian Air Force and the Hindustan Aeronautics Ltd, would be closed down to civilian traffic after completion of the new airport, as per a recent decision of the Union Cabinet.

The airport would accommodate a minimum of 20 aircraft of different types and have an ultimate capacity of catering to 40 million passengers, with the initial phase planned for a capacity of five million.