Karnataka mulls ATF tax cut

Karnataka is considering a move to lower tax on aviation turbine fuel (ATF). At 28 per cent, it is among the highest in the country at present.

The State government is also in talks with SpiceJet and IndiGo for operating in tier-II cities and has offered to underwrite seats for travel within the State.

In an interview to Business Line, the Chief Minister, Mr D.V. Sadananda Gowda, said that the government is “thinking of lowering the ATF taxes,” but is holding back the decision due to the prevailing drought condition in several parts of the State.

“We have got suggestions from all quarters, and we will be taking decisions on those lines,” he said.

Losing out to Hyderabad

With Karnataka levying huge ATF taxes, many airlines go to Hyderabad for refuelling. Consequently, the Bangalore airport is losing out on night landing facility to operate first flight and same day return flight.

Mr Gowda pointed out that earlier Andhra Pradesh had levied 32 per cent taxes on ATF, but reduced it by 5 per cent first and later to 16 per cent. “A certain fluctuation is happening, and we will certainly take an appropriate decision,” he said.

Focus on tier-II cities

The State is also exploring tier-II cities for airlines to operate, and “we are thinking of lowering ATF to facilitate them to commence tier-II operations,” said Mr Gowda. The state government is in a dialogue with airlines on tier-II operations in Karnataka.

According to him, the Shimoga airport will be ready in two months and Gulbarga in four months. For the Mysore airport, which is ready, “we are negotiating with airlines companies. SpiceJet and IndiGo have come forward to operate. Our IDD (Infrastructure Development Department) has got in touch with them to work out the modalities,” he said.

In an e-mail response to a query from Business Line, a SpiceJet spokesperson said, “We are targeting to fly everywhere we can. Currently, these destinations are being researched by us.”

The Karnataka government has come forward to underwrite seats for travel within the State, added Mr Gowda. “Our policy is to encourage operations within the State from Belgaum, Hubli, and Mysore, and Shimoga and Gulbarga later this year,” he said.

anil.u@thehindu.co.in

anju@thehindu.co.in.