Ashok Gajapathi Raju: Have Written To All CMs To Slash VAT On Aviation Turbine Fuel

13/04/2015 9:57 AM IST | Updated 15/07/2016 8:25 AM IST
PRAKASH SINGH via Getty Images
In this photograph taken on May 26, 2014, Telugu Desam Party (TDP) MP Ashok Gajapathi Raju takes the oath of office during a swearing-in ceremony for new Indian Prime Minister Narendra Modi and his council of ministers in New Delhi. India's Prime Minister Narendra Modi was expected to hold landmark talks with his Pakistani counterpart and announce his new cabinet May 27 as he looked to hit the ground running on his first day in office. AFP PHOTO/Prakash SINGH (Photo credit should read PRAKASH SINGH/AFP/Getty Images)

BENGALURU — A new civil aviation policy, which is on the anvil, will facilitate more airlines to connect metros and state capitals with more cities and towns across the country, Civil Aviation Minister Ashok Gajapathi Raju said Sunday.

"We want more airlines to operate across the country, connecting more cities and towns, as air connectivity is crucial for rapid economic growth. Our new aviation policy will accelerate the sector's growth and connect as many cities and towns in Bharat," Raju told reporters at a function here.

Admitting that running an airline was a tricky business and the aviation sector has gone through turbulent times, the minister said the new policy would encourage more investment in the sector, attract new players and enable the existing airlines expand their operations in the domestic and international routes.

"Our new policy will ensure sustainable growth benefiting all stakeholders, especially passengers and cargo operators. We have about 30 airports without aviation activity, which is non-productive. We need a long-term strategy to turn them around into assets," Raju said at the launch of Air Pegasus, a new low-cost regional airline, at the city airport.

The new policy, whose draft has been circulated among all the stakeholders, aims at enhancing air connectivity, developing six metro airports as international hubs, developing more airports through public-private partnership mode, rationonalising jet fuel cost, promoting air cargo, maintenance, repair and operations (MRO), helicopter operations and improving passenger facilitation.

"Taxation is a major issue in the sector. We have asked the finance ministry to exempt service tax on MROs for 5-10 years so that airlines can maintain, repair or service their aircraft within the country than sending them to Sri Lanka, Singapore and Dubai and save costs," Raju said.

In this context, he mentioned the inordinate delay in the setting up an MRO facility at Nagpur by national carrier Air India with the global aerospace major Boeing since 2006 due to tax and regulatory issues.

Similarly, Raju said he has written to all chief ministers to slash VAT on aviation turbine fuel, as 40-45 percent of the operational cost is incurred on this.

"Some (CMs) have responded, but not many of them. The tax on jet fuel ranges from four to 30 percent across states. To tax them (airlines) to death is not good. The tax on jet fuel needs to be rationalised," he stressed.

The policy also will address the issue of route dispersal guidelines (5/20 rule) and inter-connectivity, as the prevailing rule does not allow an airline to fly overseas without five-year operational experience and a fleet of 20 aircraft.

The ministry has identified six airports in Delhi, Mumbai, Chennai, Kolkata, Bengaluru and Hyderabad for developing them as major international hubs for aircraft, passenger and cargo movement.

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