Centre-state meeting to discuss aviation fuel levies

The central government has called a meeting with states here next week to discuss reducing high levies on jet fuel.

The meeting will be held Sep 10 and the agenda would include "reduction of VAT (value added tax) on aviation turbine fuel (ATF) by state governments, formation of a dedicated agency for facilitation of civil aviation matters and compliance of civil aviation requirements (CARs)," the civil aviation ministry said in a statement.

The meeting assumes importance as recently three major airlines Air India, Jet Airways and budget carrier SpiceJet hiked passenger fares by up to 25 percent on domestic routes following a sharp increase in the price of ATF.

Currently, ATF sold in the country is nearly 50-60 percent costlier than in overseas markets like Bangkok, Singapore or Dubai as an additional 4-34 percent state sales tax hikes the price.

The high state taxes are a legacy of a longstanding perception that ATF, which is a super-refined form of kerosene, should not be subsidised for air travel.

Fuel prices comprise about 50 percent of the operating costs of airlines in India and have dented the sector as major airlines bleed under the high state sales tax regime.

The ministry said that other major areas of discussion will be construction and development of smaller airports, sharing cost of provision of security by Central Industrial Security Force (CISF) and safety regulations being followed by state governments and public sector undertakings (PSUs) which operate aircraft for VIP movements.