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Airlines unwilling to reduce fares

Indian air operators are unwilling to cut fares until the Govt brings aviation turbine fuel under the "declared goods" category, a spokesperson of Kingfisher Airlines said.

india Updated: Dec 22, 2008 21:10 IST

Indian air operators are unwilling to cut fares until the government brings aviation turbine fuel (ATF) under the "declared goods" category, a spokesperson of Kingfisher Airlines said on Monday.

As of now, there is no case for reducing airfare, he said, adding: "We would immediately and significantly reduce fares once the government brings ATF under the declared goods category."

Last month, Jet Airways chairman Naresh Goyal said at a function in New Delhi that he did not favour fare cut as long as the ATF prices were not classified as declared goods.

Under the declared goods category, there will be a uniform 4 per cent sales tax on air fuel across the country. The proposal is now before parliament. However, several state governments are likely to oppose the uniform taxation as it would cause revenue loss to them.

Now, the sales tax varies from four per cent to 32 per cent, and accounts for over 35 per cent of airlines' operational cost.

Over the last four months, there has been a sharp decline in ATF prices. While some air carriers earlier this month reduced the fuel surcharge between Rs.200 and Rs.400, they did not touch the basic fare.

Civil Aviation Minister Praful Patel this month urged private operators to pass on the benefit of fuel price cuts to travellers.

Oil companies earlier reduced ATF prices for the seventh time since September. Now, ATF is sold at Rs 32,691.28 per kilolitre in Delhi, a reduction of Rs 4,208.37 per kl.