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SpiceJet should resolve financial problems itself, says Ashok Gajapathi Raju

SpiceJet should resolve financial problems itself, says Ashok Gajapathi Raju

New Delhi: Troubled carrier SpiceJet will have to itself resolve its financial problems and the government can only help in the process, said civil aviation minister Ashok Gajapathi Raju on Tuesday.

The government is here to be helpful and the government can be helpful but the SpiceJet problem is its finances which it will have to sort out, Raju said on the sidelines of the State Aviation Ministers' meet in New Delhi to discuss the Draft Civil Aviation Policy.

He said the Ministry was looking forward to suggestions from the state governments and discussions were underway with all the stakeholders to arrive at a policy which would bring back growth in the aviation sector.

Policy is a continously evolving process, Raju said, adding it would be put in place once responses from the state governments and other stakeholders were recieved.

Noting that the jet fuel prices contributed majorly to an airline's operating cost, the minister said while some states have brought down taxes on the aviation turbine fuel, others have not done so. If they (the other states) bring them (taxes on jet fuel down), it will facilitate air traffic. Experience shows that the states which have brought down taxes on jet fuel prices have recovered the revenue by a higher air traffic growth, Raju said.

Raju said there was a major need to promote helicopter operations in the country to promote remote connectivity, as the number of helicopter population has not improved in recent years, while the number of small aircraft and seaplanes had also remained stagnant.

The real challenge is to manage phenomenal growth of air traffic with safety.

The increase in air traffic has not only increased the demand for aircraft but also posed a challenge to meet the airport and air navigation infrastructure to ensure safe, orderly and efficient operations, the Minister said.

At the meeting, Punjab's Aviation Minister Vikram Singh Majitha said the Punjab Cabinet was considering reducing the taxes on Aviation Turbine Fuel (ATF) to four per cent very soon.

Currently, the state levies 5.5 per cent tax on jet fuel which would be reduced to 4 per cent soon, he announced.

A senior official of Uttarakhand government also indicated that the state planned to further reduce the taxes on ATF.

With this, the number of states lowering taxes on ATF was going up, with Chhattisgarh and Andhra Pradesh having already lowered taxes which stood at four and one per cent, respectively.

The sales tax on ATF varies from one per cent in Andhra Pradesh to over 30 per cent in Kerala.

Jet fuel constitutes nearly 40-50 per cent of the operating cost of an airline.

Earlier, the Minister said the civil aviation sector has grown steadily at the rate of 13.8 per cent in the last 10 years.

Though the rate of growth came down during the last two years due to the overall economic slowdown, it is recovering fast, with the year 2013-14 showing a growth of six per cent.

He said there was an impressive growth in international and domestic trade over past few years which has augured well for the air cargo industry. However, he said India's current share of air cargo compared to other modes of cargo- transportation was fairly low.

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