The Telegraph
Wednesday , December 5 , 2012
Since 1st March, 1999
CIMA Gallary

Hands-off stand on airfare

New Delhi, Dec. 4: Civil aviation minister Ajit Singh today ruled out any move to regulate air fares saying the government only wants the system to be made transparent.

“No, we are not going to regulate air fares,” he said today after meeting oil minister M. Veerappa Moily.

“What we are trying to do is make the system for deciding the fares transparent. Public should know what is the bucket system and the range they have given should be reasonable.”

Singh said airlines’ costs of operations had gone up considerably, leading to fare hikes. For instance, oil prices and charges at airports, particularly of the newer ones, have risen considerably. “All those things have to be taken into account while deciding on fares.”

A recent report by the directorate general of civil aviation (DGCA) to the civil aviation ministry indicates that rising airfare is discouraging people from travelling by air in the domestic circuit.

According to the DGCA report, even vacations have not helped in increasing demands. According to data collected by the aviation regulator, domestic traffic declined about 4 per cent in June over May to 51.08 lakh from 53.12 lakh — almost a 5 per cent fall in demand.

“The main reason behind the hike in airfare is the shutdown of Kingfisher Airlines’ operations. This had an adverse effect as the prices increased so much that people stayed away from domestic travel,” said a DGCA official.

Singh and Moily also discussed the possibility of giving declared goods status to jet fuel, a move that would lead to a uniform central sales tax of 3-4 per cent against the present practice of local sales tax or VAT ranging up to 24 per cent.

“The minister agreed to this,” said Singh. ATF alone constitutes 40 per cent of the running cost of the airlines.

Moily said his ministry had approved giving declared goods status to jet fuel, but the issue had to be decided by the finance ministry. “We will make a representation to the finance minister,” he said.

Singh said fuel dues worth Rs 4,200 crore of Air India would be cleared by the end of this financial year. On private airlines’ dues, Singh said this was an issue the oil firms and the carriers had to resolve among themselves.