Aviation minister asks states to cut ATF tax

Civil aviation minister Ashok Gajapathi Raju has asked states to cut local taxes on aviation turbine fuel (ATF), or jet fuel, in order to lighten the burden of the country's struggling airlines who find it difficult to stay profitable.

Raju merely said aviation turbine fuel (ATF) was "taxed on the higher side" and that states should "bring down" the tax. He did not indicate the amount by which taxes should be brought down.

The minister was speaking on the sidelines of a function to announce Air India's joining the Star Alliance.

Local taxes on ATF vary from state to state and in most cases the rates are high. This, combined with low fares set by competing airlines in a highly competitive market, has left almost all of the country's airlines bleeding, except perhaps one – SpiceJet.

Fuel costs in India are among the highest in the region.

Shares in listed Indian airlines jumped after Raju's comments, with SpiceJet closing up 10.03 per cent and Jet Airways up 6.55 per cent on the National Stock Exchange where the benchmark Nifty finished the day up 1.16 per cent.