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Cut taxes on ATF, Praful Patel tells States

NEW DELHI: Making a forceful plea to States to cut taxes on aviation turbine fuel (ATF) and review land acquisition practices, Civil Aviation Minister Praful Patel on Friday asked them to take advantage of the tremendous growth of the “sunrise” sector.

“States must realise that there is cut-throat competition in this sector. Airlines are losing money, mainly because of competition and high taxes,” Mr. Patel said at the first-ever National Civil Aviation Conference, which saw the participation of several State governments.

The aspirations of the people and States led to more connectivity in the country, taking the number of airports from a mere 50 in 2004 to nearly 100, which are expected to become operational by this year end.

Mr. Patel called upon the States to join the process in the next level of growth of civil aviation, as the Centre alone would not be able to cope with the unprecedented growth.

The Minister said the States should use their infrastructure, including operationalisation of the unused airports and airstrips to bring them into the mainstream. The aviation sector would bring in investments to the tune of $ 115 billion to $ 120 billion over the next decade and it would become one of the top sectors for investment and generating employment.

Emphasising the need to review and rationalise their taxation policies on civil aviation, he said if the States rationalised taxes, particularly sales tax, it would encourage more airlines to operate.

The Minister pointed out that no PSU under his Ministry got budgetary support from the Centre. “There is a myth about government support to the Ministry. Except for equity in the Airports Authority of India, Air India and some funds for a few airports in the Northeast, these PSUs do not get any financial support.”

Mr. Patel said that in the near future, airports across the country would compete to garner more air traffic and make more profits. “No major airport can be a standalone airport. They will have to become hubs and the country needs at least 10-12 such hubs like the one that will come up in Nagpur.” He visualised Indian airports competing with aviation hubs such as those in Singapore, Dubai and Doha.

Some of the State governments indicated their willingness to favourably consider the plea of Mr. Patel to rationalise the sales tax on ATF.

The Minister pointed out that the sales tax rates on ATF ranged from 4 to 34 per cent. He said Maharashtra, Delhi, Kerala, Tamil Nadu, Andhra Pradesh, West Bengal and Goa had high rates of taxes on jet fuel. ATF comprises 35-40 per cent of the domestic airlines’ total operating costs.

While Kerala Law Minister M. Vijayakumar indicated that the State government was considering reduction in sales tax on ATF, his Andhra Pradesh counterpart M.V. Ramana Rao said discussions were being held at the Chief Minister’s level.

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