Govt asks airlines to cut fares | india | Hindustan Times
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Govt asks airlines to cut fares

india Updated: Dec 17, 2008 00:46 IST
HT Correspondent

The government on Tuesday asked airlines to cut fares mirroring falling jet fuel prices, but companies, reeling under heavy losses, were in no mood to oblige.

Aviation turbine fuel (ATF) prices have fallen by over 50 per cent since August, in line with sharply declining global crude oil prices. “It is imperative that airlines cut fares, now that the ATF prices are so low,” Civil Aviation Minister Praful Patel said.

After the latest price cut announced by oil companies on Monday, jet fuel now costs Rs 32,691 per kilolitre in Delhi, down from Rs 71,028 per kilolitre in August.

Oil companies have cut jet fuel prices seven times during the past four months. But airlines have reduced fares only once, by a mere Rs 400.

“We have not taken a decision on reducing airfares,” an Air India spokesman said when asked whether the state-run carrier was contemplating an across-the-board fare cut after the minister’s plea.

Private carriers echoed the line. “The airline will take a decision on fare cuts on December 20,” said a Kingfisher Airlines spokesman.

A Jet Airways spokesperson said there had been no decision on a fare cut. Low-cost carrier SpiceJet said it was still evaluating the impact of the jet fuel price cut.

India is one the most expensive places to tank up for airlines with a diverse taxation structure across states that levy taxes ranging from 4 per cent to 30 per cent on aviation fuel.

As a result, ATF prices in Kolkata are 25 per cent higher than in Delhi, a difference of more than Rs 8,100 per kilolitre. Airlines have been demanding that jet fuel be placed under the ‘declared goods’ category that would attract a uniform 4 per cent state tax.

The finance ministry said no final decision had been taken on the matter. “The government is yet to take a final view on the proposal to place ATF in the category of declared goods,” minister of state for finance S.S. Palanimanickam informed Parliament in a written reply on Tuesday.