Govt Told To Slash Aviation Fuel Price

The parliamentary standing committee on transport and tourism has asked the Centre to rationalise the price of aviation turbine fuel to bring its domestic costs closer to the international levels.

Otherwise, the domestic airlines in India, both in the private and public sector, would continue to suffer heavy losses, the committee said in its report tabled in Parliament recently.

Noting that the price of aviation turbine fuel (ATF) in India was almost four times the international price, the committee, headed by Bharatiya Janata Party MP Sunder Singh Bhandari, said fuel expenditure accounted for nearly 30 per cent of the total cost of operation for domestic airlines as against less than 20 per cent in the rest of the world.

 

From the point of view of the long-term health of civil aviation in India, the government should rationalise the price of ATF, it said. The panel had earlier called for an early decision to relieve the extra burden of high ATF costs.

The committee was told that high cost of aviation fuel was a major expenditure for Indian Airlines as it had to pay 165 cents per gallon for fuel whereas in Singapore, the cost of the fuel was only 40 cents per gallon.

The civil aviation ministry had told the panel that following the decision of the committee of secretaries (CoS) on December 20, 1995, the finance ministry and revenue department were examining the issue in consultation with the law ministry and amend the Central Sales Tax Act of 1956.

The committee was informed that an amount of Rs 250 crore a year could be reduced as cost of operation for I A, if ATF was to be charged at international rates. The loss of IA had reached a high of Rs 258.46 crore during 1993-94, which has since declined. While the anticipated losses during 1996-97 were only Rs 40.75 crore, it was estimated to be higher in the current fiscal at Rs 60.50 crore.