Maharashtra puzzles industry - slash on ATF duty not applicable for Mumbai and Pune
24 Mar 2008
Mumbai: Joining the growing list of states that have slashed rates of aviation turbine fuel (ATF) the Maharashtra government cut the Value Added Tax (VAT) on ATF from 25 per cent to four per cent. Unlike other states this has been a qualified move, as the reduction will be valid only in tier-II and tier-III cities in the state and leaves out the major metros of Mumbai and Pune.
The move has been welcomed by domestic airlines with some of them considering if reduction in rates will occur across the board or by way of differential pricing.
The move has the advantage of adding smaller cities of the state onto the destination list of carriers, especially LCCs. JetLite, the low cost subsidiary of Jet Airways, will begin daily flights between Delhi and Aurangabad by end of the month. IndiGo will, very likely, add Aurangabad, Nagpur and Shirdi to its network. Deccan, the pioneering LCC, is also planning to start operations to Aurangabad and Shirdi.
The airlines and the ministry of civil aviation appear to be somewhat nonplussed by the move to leave Mumbai and Pune out of the ambit of the reductions, as 50 per cent of the traffic in the state takes place at these two airports.
Mumbai's Chattrapati Shivaji International Airport (CSIA), India's busiest airport, is currently served by 46 international airlines. It is also the hub for Air India, Jet Airways, JetLite, GoAir, Spice Jet, IndiGo Airlines and Kingfisher Airlines.
