The Hindu : Business : Airline operating costs to drop as ATF is now deemed export

Online edition of India's National Newspaper
Thursday, Mar 03, 2005

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Business

Airline operating costs to drop as ATF is now deemed export

By Our Special Correspondent

NEW DELHI, MARCH 2. The proposal in the latest budget to treat aviation turbine fuel (ATF) as deemed export for international operations of designated Indian carriers is likely to provide a level playing field to the public sector and private carriers such as Jet Airways and Air Sahara which are scheduled to begin flying abroad from April.

Talking to reporters here on Tuesday, the Civil Aviation Minister, Praful Patel, expressed the hope that the Finance Minister, P. Chidambaram would take further steps to make ATF cheaper even for domestic operations.

The Finance Minister proposed amending the Central Sales Tax Act, 1956, to declare the sale of ATF to a designated Indian carrier for its global operations as deemed to have taken place in the course of the export of goods out of India, enabling them to purchase the fuel without paying the CST. The ATF cost now accounts for over one-third of the total cost of an air ticket in the domestic sector.

IPO by year end

Mr. Patel said that both Air India and Indian Airlines have been asked to prepare the ground to launch their initial public offerings (IPOs) by the end of this year to aid their expansion plans. Employees of both AI and IA would be given price preferential and firm allotment of IPO so that they remain partners in the progress of the carriers.

The Emirates Airlines vice-president for India, Abdulla Nasser Abdulla Hussain, described the budget proposal on ATF as a move in the "right direction." He said the move to slash import duty on crude oil and listed fuel products would reduce direct costs for airlines and operators.

Modernisation

On the modernisation plans for the Mumbai and Delhi airports, Mr. Patel said that the construction of a second parallel runway at Delhi airport would begin within six months and it would be ready within a year.

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