Classifying ATF as ‘declared good’ will sharply
reduce tax on the fuel
New Delhi, Dec. 4:
The Civil Aviation and Petroleum Ministries plan to jointly approach the
Finance Ministry to convince it on the need to notify aviation turbine fuel
(ATF) as a ‘declared good’.
The proposal’s acceptance will mean that the States will not be able to
levy sales tax of more than four per cent on ATF. At present, the sales tax on
ATF goes as high as 30 per cent.
The high domestic cost of ATF is one of the major causes for airlines’
being in the red, the industry has repeatedly claimed. ATF accounts for 35-40
per cent of the operating cost of most domestic airlines.
Cartelisation
Meanwhile, at a meeting here on Tuesday the Petroleum Minister, Veerappa
Moily, agreed to a proposal to put ATF under the Petroleum and Natural Gas
Regulatory Board (PNRGB). This was after Civil Aviation Minister Ajit Singh
pointed out that the state-owned oil companies were indulging in cartelisation
in ATF pricing.
Placing ATF under PNRGB will mean that the Board can monitor prices and
take corrective measures if it feels that cartelisation is taking place.
To support its case the Aviation Ministry pointed out that on October 16
the three state-owned oil companies charged Rs 52,792 for a kilolitre of ATF in
Chennai, while in Kolkata they charged Rs 54,479 per kilolitre.
Pricing mechanism
Singh suggested moving to the Mean of Platts Arab Gulf (MoPAG) pricing
mechanism for ATF, instead of import parity pricing that OMCs (oil marketing
companies) follow at present.
The Civil Aviation Minister felt that MoPAG adoption will bridge the
differential in ATF pricing that airlines face while picking up aviation fuel
in India and nearby airports such as Singapore, Bangkok and Dubai.
Implementing these measures, Government officials hope to see airlines’
operating costs come down and, thereby, allow them to cut domestic air ticket
prices.
Speaking to newspersons after the meeting, Singh said that the Ministry
did not regulate domestic airfares.
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