State finance ministers to review sales tax on aviation fuel

New Delhi, Mar 13 (UNI) The Federation of Indian Airlines (FIA) and the ministry of civil aviation have formed an empowered group of state finance minister in an effort to reduce the sales tax component on air turbine fuel (ATF).

''Fuel prices need to come down,'' said civil aviation minister Praful Patel. ''State governments must reduce sales tax and there should be more competition in this area.'' At present, government-owned oil refining companies enjoy monopoly over ATF and airlines pay eight per cent central excise tax and state sales tax which varies from four to 39 per cent.

ATF is the single highest cost element for airline companies accounting for over 40 per cent of their total costs. Airlines in the country pay almost double the price for it than in other countries.

On the proposed peak hour airport charges, Mr Patel said no final decision has been taken as yet.

''The civil aviation ministry has formed a committee to find ways for optimising available airport infrastructure facilities,'' he told reporters.

There is scope for airlines to shift flights from peak to non-peak hours so that congestion in busy airports at Delhi, Mumbai and Bangalore can be reduced, said the minister.

FIA member Vijay Mallya, who is chairman and managing director of Kingfisher Airlines, said there is congestion at these airports and efforts are on to solve the problem. ''Peak hour charges should be compensated by incentives in non-peak hours.'' Mr Mallya added that the entire aviation industry in India is losing money and passengers will have to pay more if peak hours charges are imposed. ''We don't fly planes for fun.'' 0800 hrs to 1000 hrs and 1700 hrs to 1900 hrs are generally accepted as peak hours at airports.

UNI