Patel briefs Cabinet on aviation industry woes

New Delhi: Civil aviation minister Praful Patel made a presentation before the Union Cabinet on the troubles faced by the aviation industry on Thursday. In the course of the presentation he also argued for capital infusion into struggling state-run enterprise, Air India.

Air India, which has an equity base of just Rs145 crore, has orders for new jets worth Rs50,000 crore.

Patel said he also pointed out that the base price of aviation turbine fuel (ATF) was much higher in India as compared to most countries, accounting for more than 40 per cent of the total operational cost of an airline as compared to the global average of 20-25 per cent.

On the contentious issue of ATF prices, Patel pointed out that the prices of jet fuel had increased by 99.6 per cent over the past year. The price per kilolitre averaged between Rs24,000 and Rs26,000, in East and Southeast Asia as well as Dubai, London and New York. This compared to Indian states like Andhra Pradesh, which had the lowest sales tax rate of four per cent, where the price ranged from Rs34,000-35,000. In Delhi, it was Rs38,000, in Mumbai over Rs40,000 and Rs46,000 in Kolkata.

ATF attracted sales tax rates of 28-30 per cent in Karnataka, Bihar, Madhya Pradesh, Tamil Nadu and Gujarat, and 25 per cent in Maharashtra, West Bengal and Himachal Pradesh. Delhi, Goa, Haryana, Jharkhand, Chandigarh and some other States were charging 20 per cent, while in Jammu and Kashmir, Uttar Pradesh and Nagaland the rate was 21 per cent.

The Cabinet was also informed of the decision of the Airports Authority of India (AAI) to raise funds by issuing infrastructure bonds worth Rs5,000 crore. The AAI is currently involved in the process of modernising and upgrading a large number of airports around the country, including metro airports of Kolkata and Chennai.