The Hindu Business Line : Patel to hold talks with airlines on lowering fares

New Delhi, May 9 Domestic air fares could soon come down if the Ministry of Civil Aviation has its way. On Friday, the Minister of Civil Aviation, Mr Praful Patel, announced that he would soon hold a meeting with domestic airlines to convince them on the need for lowering fares to and from States that have reduced sales tax on aviation turbine fuel (ATF).

Addressing a press conference, the Minister said that he also planned to meet the Prime Minister, the Union Ministers for Finance and Petroleum and State governments to get some relief for airlines.

At the airlines meeting an attempt will be made to convince them to “plough back” some of the incentives that have been offered by the States by offering lower airfares.

At the moment, Andhra Pradesh and Kerala are the only States that have reduced sales tax on ATF to 4 per cent, thereby, cutting the fuel bill of airlines operating there.

In Maharashtra, airlines are also charged sales tax at a lower rate in most airports except Pune and Mumbai. Most other States levy a sales tax of up to 32 per cent on ATF, thereby, increasing the fuel cost. Fuel accounts for 40-45 per cent of the operating cost of most domestic airlines.

Meanwhile, with no tangible benefits becoming visible some States have threatened to withdraw the benefit of lower sales tax on ATF.

The meeting with the Prime Minister, senior Union Ministers and the States will be utilised to convince them to bring down the customs duty and on how the domestic ATF prices were up because of the base price being higher than what was charged abroad and sales tax levied by the States.