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High jet fuel prices may dampen civil aviation growth
Published on 26 Feb. 2011 12:42 AM IST
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High jet fuel prices may dampen the aviation sector in the country, cautioned India’s Economic Survey 2010-11, tabled by Finance Minister Pranab Mukherjee in parliament Friday.
“The single largest element contributing to airline costs is aviation turbine fuel (ATF) which accounts for 40 percent of the operating cost of Indian carriers as against a figure of only 20 for international carriers,” read the annual report on the economy.
According to the survey, ATF in India is priced 60 percent higher than anywhere in the world, which is causing a negative impact on the airline balance sheets, thereby eroding their competitiveness, and reducing connectivity.
“There is a severe risk of dampening of passenger market growth by quickly making air travel out of reach for a significant portion of the market, which was fuelling its growth,” the survey said.
Recently, the three-major state-run oil marketing companies hiked the jet fuel price by four percent, which increased the prices by `2,104 per kilolitre, to take them to `53, 538 per kilolitre. This was the ninth consecutive rise in rates since October last year. Last year, two of the major airlines Jet Airways and Kingfisher airlines hiked their fares by up to `200 per ticket due to the increasing ATF prices.
The two airlines increased fuel surcharge by `100 for travel up to 750 km and `200 for flights covering a distance of over 750 km. Even, Praful Patel, the then civil aviation minister, had requested the finance minister to cut the sales tax on ATF in the general budget to control the soaring prices.

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