New Delhi, Nov 04: After scrapping customs duty on
jet fuel and reducing its price, government is contemplating
taking some more measures to help the fledgling Indian
aviation sector become viable once more.
"We expect more steps in this direction. The dialogue
is going on ... some more steps may be taken," sources in the
Civil Aviation Ministry said here.
However, sources did not specify what steps could be
taken. Issues raised by the industry, like rationalisation of
the eight percent central excise on jet fuel, still remain to
be addressed.
As a result of the government abolishing five percent
customs duty on aviation turbine fuel (ATF) from today, state-
run oil firms have cut jet fuel prices by Rs 2,100 per kilo
litre, on top of the 17 percent price reduction announced
late last week.
Asked how long would it take for the industry to pass on
the benefits of these cuts to the passengers, they said the
airlines would have to ensure good pricing to win back those
flyers who had earlier left train travel but has now returned
to it.
They also wanted the industry to come out of the red.
Their comments come in the wake of the International Air
Transport Association (IATA) asking the government to reduce a
variety of taxes and charges, some of which, it said, violated
international obligations to help the Indian airline industry.
Warning that the global crisis in aviation was
"deepening", IATA Director General and CEO Giovanni Bisignani
said India was "one of the epicenters with potential losses of
USD 1.5 billion this year .... The most urgent (measure) is to
address taxation, which is crippling the industry."
In a statement from Geneva, the IATA chief Bisignani
welcomed the customs duty cut and the passage of the Bill in
Parliament to set up the Airport Economic Regulatory Authority
(AERA) and stressed that the regulator should be set up
expeditiously.
Seeking a "reasonable" taxation regime in India, he said
the service tax on premium class tickets, air navigation
charges, landing and parking charges were "contrary to the
International Civil Aviation Organisation's resolution calling
for a reduction of taxes".
"Taxing overflight charges also breaches India's
international obligations. Even though India has a seat on the
ICAO Council, today many of these principles are being ignored
back in Delhi," he said.
Bisignani hoped the government would soon address all
other taxation issues, including 8 percent excise duty.
He said the state governments, which also imposed hefty
sales taxes on aviation turbine fuel, "must also understand
that the situation is desperate, and deliver a fair solution
on the excessive sales tax, which is ome cases is as high as
30 percent".
If this was not done, then "they will need to share
responsibility for the broader economic consequences of a
failing industry," the IATA chief said.
The Indian aviation industry has suffered an accumulated
loss of over Rs 4,000 crore last year and are expected to lose
more this year.
Bureau Report
First Published: Tuesday, November 04, 2008, 00:00