Govt to cut ATF tax, airfares may fall

New Delhi, Nov 25: P Chidamabaram, Union Finance Minister on Monday, Nov 24 said that the government will reduce the cost of Aviation Tribune Fuel (ATF) may result in the lowering of airfares as well. Chidambaram wants to notify ATF as a declared good which may attract a uniform four per cent of sales tax.

He said to media, "We will introduce the bill to declare ATF as a declared goods provided we are assured that there is broad support in Parliament." This move will help airlines who are expected to lose over Rs 3000 crore this year. In reaction to Finance Minister's announcement, Kingfisher chief Vijay Mallya said, "If ATF is brought under declared goods, we will reduce fares, see that there are no job losses and increase rural connectivity."

Experts say that this move from the government will boost the sector and may result in airlines coming up with attractive fares. Low cost carriers will benefit the most.

With oil prices soaring to over $140 a barrel, fuel accounted for over 50 per cent of the operating cost.