ATF policy revamp on the cards

Civil aviation ministry will encourage competition in ATF supply to cut costs of airlines.

The government is contemplating wide-ranging tax cuts on aviation turbine fuel and breaking the monopoly of public sector oil companies on the fuel. This can cause air fares to tumble.

Thanks to the high taxes, ATF prices in India are almost the double of those in other countries. Consequently, ATF has come to account for as much as 30 per cent of the operational costs of Indian carriers, against 15 per cent for carriers in other countries.

The civil aviation ministry has proposed to rationalise excise duty, import duty, sales tax and other levies on ATF.

In addition, aviation fuel and gas will be notified as declared goods under the "declared goods" category of the Central Sales Tax Act in consultation with states.

The ministry will also take steps to end monopolies and encourage competition in ATF supply to further reduce operating costs of airlines. All eligible suppliers of ATF will be provided equal access to the ATF supply system, which will be regulated by the proposed Airport Economic Regulatory Authority.

International ATF suppliers will be encouraged to participate in the ATF supply system. The central government will issue the relevant permissions to the operators.