PM denies immediate relief to the aviation sector

June 12th, 2008 - 11:37 am ICT by IANS  

New Delhi, June 11 (IANS) Prime Minister Manmohan Singh refused to announce any immediate relief to the airline industry that is hit by high aviation fuel cost, but assured the industry leaders that he would take up the matter with state finance ministers June 16. Singh said this to Civil Aviation Minister Praful Patel and representatives of major airlines who met him Wednesday seeking relief measures for the industry.

“The prime minister told us that the government would take a view after it is discussed by the State Finance Ministers’ Empowered Group,” Patel told reporters after the meeting.

The prime minister told the delegation that the issue of high taxes on aviation fuel was a matter concerning states and the central government could not take a decision without taking the states into confidence.

“The government has its own constraints,” added Patel.

He said the next round of meeting would take place after getting the feedback of the state finance ministers.

When the average fare was Rs.6,050 in 2004, the fuel cost was Rs.21,000 per kilolitre. However, the cost of fuel now is Rs.70,000 per kl, but the average fare went down to Rs.3,950, Patel said.

“It is a wrong practice by the airlines to issue air fares which are below the fare structure followed by the aviation industry. We need a national pricing policy for the airline industry,” he stressed.

The minister said any relief to the airline industry could be expected only if these concerns were addressed during the state finance ministers’ meet.

“We cannot expect government to offer tax rebate from the aviation fuel which costs Rs.50 billion to the airline sector,” Patel added.

He added that the aviation fuel should get the subsidy like that on Kerosene. “Aviation is no more a sector in the luxury segment. The entire economy is dependent on it. Its fuel pricing needs to be addressed,” asserted Patel.

Other issues regarding route navigation charges were also discussed with the prime minister.

Some air operators have already told Patel that they would prune their services, as they were unable to meet the operational cost.

On May 31 the government-run oil companies hiked the prices of aviation fuel by 18.5 percent. The hike pushed fuel costs to Rs.69,227 per kilolitre in Delhi against Rs.58,387.92 earlier and Rs.76,625.68 per kilolitre in Mumbai against Rs.64,824 earlier.

The airlines responded by increasing the fuel surcharge.

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