Group of ministers has okayed direct imports by airlines of aviation turbine fuel, which is about 50% dearer here than regionally, thanks to high imposts, particularly state level sales tax. And cash-strapped domestic carriers, with a debt burden of Rs 70,000 crore, can hope to lower their fuel bills by 10%-15% - fuel accounts for nearly 40% of their overall costs.

However, airlines do not have their own infrastructure to import fuel and ferry it to fuelling facilities at airports. So, unless there is an open access policy that mandates existing fuel marketing companies to make their logistics facilities available to the airlines, certainly for a fee, no jet fuel import would take place. 

Besides, the imports have to be in minimum lot sizes of 10,000-20,000 tonnes, probably paid upfront, which implies further barriers to imports. Hence the pressing need to revisit the entire issue of high taxes on transport fuels, jet fuel included as per a report in ET.

In a large country like ours, we need to end the high-cost regime that comes in the way of efficiency improvements in refining, supply and delivery. The high taxes on jet fuel is an anachronism from the pre-reform days when air travel was a preserve of the rich and the powerful.

Now that domestic aviation is growing at 15% annually, and is projected to be the world's third-largest market by 2020, there is good reason to reduce levies, especially sales taxes, on rising volumes of jet fuel. The government needs to open up independent marketing of all petro-fuels, and transfer subsidy as cash to target beneficiaries.

(You need to login first to read complete news).
New User? Register for FREE!
» Back to Travel News