Chairman of Kingfisher Airlines, Vijay Mallya, on Tuesday appeared to link airlines in India cutting fares to the government reducing sales tax on aviation turbine fuel and giving ATF "declared goods status".
Mallya told reporters in Bangalore that in response to the call given by the Civil Aviation Minister Praful Patel to lower prices (air travel fares), he is willing to lower prices to reflect the lower crude oil prices and therefore the lower ATF prices but that would mean a reduction in fuel surcharge by all airlines "which we will debate and decide among ourselves".
He, however, added: "But if the fuel prices go up as crude oil prices go up, we will be back to square one. So the permanent solution here is for the government to realise that we simply can't afford to pay such high rates of sales tax, and to give ATF 'declared goods status' and then we will be very happy to make fares more affordable and stimulate demand in air travel".
Later, in an address at the TiE Entrepreneurial Summit 2008, Mallya said though there are reports in the press about "all airlines going bankrupt", it's a question of maintaining a steady course (for the airlines).
When the crude prices went up from an average of $45-50 a barrel to up to $147, Indian civil aviation industry had a terrible time.
The industry "broke its back" because on an average, it paid 26 per cent sales tax on ATF.