Maharashtra CM mulling relief on ATF tax to help airlines

Mumbai, Feb 12: Maharashtra Chief Minister Prithviraj Chavan has indicated that the state government may share an "equitable burden" with the Centre to provide relief to the aviation sector by reducing sales tax on aviation turbine fuel (ATF).

"The country needs a very robust aviation sector, and a developed state like Maharashtra needs it much more than a state like Mizoram or Manipur," Chavan said here. "It is clear that the aviation industry is bleeding.

Always, when they (airlines) come to us, they request us for lower ATF rates," Chavan said, interacting with reporters at his official residence here two days ago. "The Centre has allowed them to import ATF directly, which means it has lost revenue in some or the other way," the Chief Minister said, adding that the state was also ready to bring down sales tax on the jet fuel.

"I have not calculated how much impact will be there." "In 2008, the Centre gave a huge stimulus package to revive the aviation industry. I think the state will also have to share an equitable burden that the Centre is sharing. We need a healthy airline industry."

Last week, the Union Cabinet allowed airlines to directly import the jet fuel. Sales tax on ATF varies from 4 percent to 32 percent. Fuel bill constitutes over 40 percent of the operational costs of airlines. None of the six airlines in the country are making money; all the three listed airlines have reported huge losses due to nearly 100 percent spike in ATF cost during the December quarter.

The Federation of Indian Airlines (FIA), which has approached the state seeking relief, says a rationalisation of ATF sales tax will see more aircraft re-fuelling in the state, which can, to some extent, take care of the losses from reduction of tax.

PTI