Patel to approach oil companies for reduction in ATF prices

New Delhi, May 10 (UNI) The civil aviation ministry is planning to approach public sector oil marketing companies for a possible reduction in abnormally high fuel prices plaguing all airlines.

''Within a fortnight, we'll ask oil companies to reduce the prices,'' said civil aviation minister Praful Patel. ''We want to unlock the monopoly of public sector oil companies so that artificially-high prices can be brought down.'' Aviation turbine fuel (ATF) prices in India are nearly 65 per cent higher compared to international benchmarks. Aviation fuel is the single highest cost element for airline companies accounting for over 40 per cent of total costs.

Mr Patel said the civil aviation ministry may shortly ask for permission to import bulk supplies of ATF. ''Otherwise we'll in a quandary.'' Oil companies fix a high base price for aviation fuel to subsidise their other products. On top of, it is the eight per cent central excise tax and then the state sales tax which varies from four to 39 per cent.

The country's aviation industry has witnessed unprecedented growth in air passenger traffic in recent years due to new budget airlines and a booming national economy. But high fuel costs, wage inflation and high airport charges have rendered the industry losing over Rs 2,000 crore annually.

The government recently allowed hedging of ATF by carriers on their domestic purchases in an effort to give them some relief.

UNI