Meeting to discuss jet fuel tax, other issues

With the airline industry looking up to the government for urgent steps to reduce taxes on jet fuel, a meeting of state civil aviation ministers and officials has been convened here tomorrow to discuss this and other issues.
The meeting, to be addressed by Civil Aviation Minister Ajit Singh and Minister of State K C Venugopal, would also discuss issues relating to regional connectivity, development of new airports in different states, apart from VIP plane and helicopter operations and related facilities.
However, a major issue would be that of aviation turbine fuel (ATF) prices, which constitute around half of an airline's total operational costs.

Aviation sources pointed out that since the dismantling of the Administered Price Mechanism in 2001, ATF prices in India are based on international import parity prices which were directly linked to the benchmark of Platt's publication of FOB (free on board) Arabian Gulf prices.
"These prices do not in any manner reflect the actual cost of production of ATF in India and several add-ons are included to arrive at the local delivery price," a source said.
The add-ons included freight charges from Gulf to India, domestic transportation charges, oil company's markup, excise duty at 8.24 per cent, into-plane and airport throughput charges and sales tax -- ranging between 16-30 per cent along with surcharge, the sources said, adding the sales tax averaged 22 per cent across the country.

Government's decision to allow direct ATF imports by airlines was yet to take off due to high costs involved in setting up infrastructure for importing the fuel and lack of support from the oil companies, Debashish Saha, a senior official of Aeronautical Society of India, said.