After scrapping customs duty on jet fuel and reducing its price, government is contemplating taking some more measures to help the fledgling Indian aviation sector become viable once more.
"We expect more steps in this direction. The dialogue is going on ... some more steps may be taken," sources in the civil aviation ministry said.
However, sources did not specify what steps could be taken.
As a result of the government abolishing five per cent customs duty on aviation turbine fuel from Tuesday, state-run oil firms have cut jet fuel prices by Rs 2,100 per kilo litre, on top of the 17 per cent price reduction announced late last week.
Asked how long would it take for the industry to pass on the benefits of these cuts to the passengers, they said the airlines would have to ensure good pricing to win back those flyers who had earlier left train travel but has now returned to it.
They also wanted the industry to come out of the red.
Their comments come in the wake of the International Air Transport Association asking the government to reduce a variety of taxes and charges, some of which, it said, violated international obligations to help the Indian airline industry.
Warning that the global crisis in aviation was 'deepening', IATA director general and CEO Giovanni Bisignani said India was 'one of the epicenters with potential losses of $1.5 billion this year .... The most urgent (measure) is to address taxation, which is crippling the industry."
In a statement from Geneva, the IATA chief Bisignani welcomed the customs duty cut and the passage of the Bill in Parliament to set up the Airport Economic Regulatory Authority and stressed that the regulator should be set up expeditiously.
Seeking a 'reasonable' taxation regime in India, he said the service tax on premium class tickets, air navigation charges, landing and parking charges were 'contrary to the International Civil Aviation Organisation's resolution calling for a reduction of taxes'.
"Taxing overflight charges also breaches India's international obligations. Even though India has a seat on the ICAO Council, many of these principles are being ignored back in Delhi," he said.
Bisignani hoped the government would soon address all other taxation issues, including 8 per cent excise duty.
He said the state governments, which also imposed hefty sales taxes on aviation turbine fuel, "must also understand that the situation is desperate, and deliver a fair solution on the excessive sales tax, which is ome cases is as high as 30 per cent".
If this was not done, then 'they will need to share responsibility for the broader economic consequences of a failing industry,' the IATA chief said.
The Indian aviation industry has suffered an accumulated loss of over Rs 4,000 crore (Rs 40 billion) last year and are expected to lose more this year.
