Press Information Bureau
Government of India
Ministry of Civil Aviation
26-April-2012 16:48 IST
Changes in Aviation Sector
Shri Ajit Singh, the Minister of Civil Aviation informed Rajya Sabha today in a written reply that the civil aviation sector is passing through a phase of crisis, where most airlines are incurring operational losses. The Government has taken several measures to ameliorate the problems being faced by airlines and ensure long term viability of the sector. Some of the steps taken by the Government in this regard are as follows:

i) A Working Group has been constituted under the Chairmanship of Secretary, Civil Aviation with Finance Secretary, Secretary, Financial Services, Secretary, Ministry of Petroleum and Natural Gas and Director General of Foreign Trade to discuss the factors causing stress in civil aviation and to suggest solutions to the same.

ii) The issue of rationalization of Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), has been taken up with the State Governments.

iii) Director General of Foreign Trade has allowed import of ATF by airlines on actual user basis.

iv) A Committee under the Chairmanship of Secretary, Civil Aviation has been constituted to undertake formulation of a Civil Aviation Policy.

The Minister further informed that the Indian Air Transport Industry is burdened with higher operating cost than their counter parts globally. This is mainly due to the high costs of ATF and the distorted and high rate of taxes on all services and commodities associated with the sector. Fuel, aircraft leases, airport charges, air tickets, air navigation service charges, maintenance costs, fuel throughput fees, into-plane fuel charges, are also subjected to service taxes.