THIRUVANANTHAPURAM: The state government decision to reduce the tax on Aviation Turbine Fuel (ATF) will have no impact on the existing air fares as it will be applicable only for new domestic services under the regional connectivity scheme like UDAN (Ude Desh Ka Aam Nagarik). “The cabinet on Wednesday decided to reduce the tax on aviation turbine fuel to five percent from 28.75 percent only for regional connectivity. There would not be any tax reduction on ATF on existing domestic or international flights," a top government official clarified to DC.
All major airlines have been urging the state to bring down the ATF so as to cut air fares as well as to enhance connectivity, especially to the Gulf sector. Even at a meeting of major airlines convened by chief minister Pinarayi Vijayan in May, the airlines' officials had suggested steep reduction in ATF tax to cut air fares. Some airlines even sought only one percent tax on ATF. The civil aviation ministry has been also urging all states to bring down the tax on ATF.
Aviation experts point out that bringing down the ATF's tax would lead to reduction in fares and attracting more aircraft and enhancing fuel intake. "About 300 aircraft are flying over Kerala skies every day. Thiruvananthapuram is even the mid-point of the busy Gulf - Singapore sector. If the state could offer ATF at competitive rates, many of these flights may prefer to take fuel from here and the state could get more income from tax. The airports will also get additional income in way of landing and other charges. At present many aircraft are taking fuel from Sri Lanka," an aviation expert pointed out.
The state government will soon convene a meeting of various domestic airlines seeking proposals to operate to routes like Mysore, Madurai and Coimbatore that now remain un-served. A state-level monitoring-cum coordination committee headed by additional chief secretary (revenue) P.H. Kurian was recently formed for pursuing the UDAN scheme. However, under it, the ATF's tax should be only one percent. Hence the state may not get the benefit of the scheme with five percent tax on ATF, said sources.
