Falling jet fuel prices may not be enough for airlines to start making money. To create a sustainable business and drive aviation growth in the country, say airlines, the Centre needs to realign the taxes with other markets.
Airlines say that petroleum companies and the government account for close to 55-60 per cent of their costs, on which they have no control. Jet fuel or aviation turbine fuel (ATF) alone accounts for 42 per cent of an airline's cost in India.
"In any other country, fuel and government don't account for more than 15-20 per cent of an airline's cost. Archaic taxes are causing losses and is also the reason for higher air fares (in this country)," says GoAir CEO Jeh Wadia.
"If the government declares ATF as a declared good, the sales tax across the states will be uniform, and come down. We could become profitable overnight and straight away reduce fares by Rs 300-500, which would help create a mass market of people who can fly," adds Wadia.
The recently-formed Federation of Indian Airlines has taken up some of these issues with the Union finance minister and petroleum minister but airlines aren't happy with the response. "They all say we will look into it," says another airline CEO who didn't wish to be identified, adding, "for the aviation business to be sustainable, we need to focus on tax reforms and ensure transparent policies."