Indian cabinet committee to study aviation fuel tax

Singapore
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India has formed a cabinet minister-level committee to look into the highly contentious issue of taxes on aviation fuel.

The "Group of Ministers" will study the tax, which varies between 4% and 30% depending on the state, and look into the "reduction of the base price" of aviation fuel "to bring it at par with international prices", says India's civil aviation ministry.

India's beleaguered airlines have been appealing to the government to bring down the tax in order to help them reduce costs and cope with the ongoing economic crisis. Some private carriers threatened to stop operations for one day in protest, but pulled back due to opposition from the government and the public.

The country's civil aviation minister Praful Patel said that aviation fuel accounted for 40-45% of the operating cost of Indian carriers, compared to global average operating cost of 25-30%. Prices have gone up by 99.6% in the last year, while diesel prices and petrol prices rose by only 14.9% and 17.9% respectively, he added.

The total number of passengers carried by Indian airlines grew from 28.5 million in 2003-04 to 70.1 million in 2008-09, and the number of aircraft went up from 158 to 396, said Patel. During this same period, the consumption of aviation fuel grew from 2.48 million tonnes to 4.46 million tonnes.