In A last ditch effort to prevent a possible hike in domestic air fare, Indian Airlines (IA) and Jet Airways have constituted a joint team to talk to states charging high sales tax on Aviation Turbine Fuel (ATF).The cost of the fuel shot up by over Rs 3000 a kilo litre as global prices surged earlier this month. With the Budget too not providing any relief in the excise duty levelled on this item, IA proposed an across-the-board 10 per cent hike in air fare to the Ministry of Civil Aviation (MCA) last week.MCA, in turn, asked the airlines to first exhaust all possible options before increasing the fare. MCA even requested the Ministry of Petroleum to consider some kind of a relief package for both IA and Air India. A request on relief from the excise duty levelled on the fuel has also been forwarded to the Ministry of Finance.But the problem for domestic carriers appears to be far more acute. While there are states like Andhra Pradesh, which to lure domestic airliners have brought down sales tax on ATF to 4 per cent, there are others like Kerala which impose 39 per cent sales tax on the fuel.With no response yet from either the Petroleum or Finance Ministry, IA and Jet Airways have now come together to urge states charging high sales tax to consider giving some relief. The team today met the West Bengal government regarding the same. It plans to hold discussions on emergency basis with governments of Kerala, Karnataka, Maharashtra, Assam, Tamil Nadu and MP to find a way out. Civil Aviation Minister Shahnawaz Hussain is said to have spoken to Assam CM Tarun Gogoi asking him for cooperation.IA, for one, is sure that without any relief it will have no choice but to escalate prices. With business not picking up and the off-season period staring at its face, it is concerned about the impact on air travel.The price of ATF now stands at Rs 25,200 a kilo litre. With additional levies to cough up, domestic carriers say profit margins are getting thinner by the day. The levies in India, they say, are much higher making it easier for airline companies to carry out international operations.With sinking revenues and huge loans, many of the states argue that every single penny collected as cess is critical for them. Yet, states like Andhra Pradesh have favoured reducing the sales tax hoping increased air operations would ultimately have a positive impact on its economy. As discussions gather pace on the subject, sources say, people ought to be prepared for a hike in air fare.
