Exempting aviation turbine fuel (ATF) from taxes is a difficult thing to do, Civil Aviation Minister Ashok Gajapati Raju said here on Tuesday, dashing hopes of the sector which has been demanding the tax break to come out of a long-running turbulence.
Fuel accounts for 40-45 per cent of the cost of operations of airlines, many of which have been struggling to come out of the red.
“Finance Minister [Arun Jaitley] had interacted with the Chief Ministers. They wanted petroleum products to be kept out of it [exemptions],” he said when asked by The Hindu during an interview why the fall in ATF prices had not been taken advantage of to revive the aviation sector.
Looking back on the first year that he piloted the Ministry, Mr. Raju said the number of passengers had recorded a healthy growth. “So we would like this growth to continue,” he said.
On the issue of “predatory pricing” by airlines, with tickets getting cheaper during lean seasons and peaking for last-minute travel, the Minister said it was difficult to regulate the fare — there were people who benefited from it and there were those who suffered. Having caps would hurt economic activity. “So there are two sides of the coin, and how does one go about it is the question,” he said.
On the 5/20 rule, allowing airlines to fly international flights only if they complete five years of domestic operations and have a fleet of at least 20 aircraft, the Minister said sooner the rule was thrown out the better.
He said Air India needed to get its books in order and overcome the indiscipline and look forward.
