BUDGET VIEW - Airlines want taxes on jet fuel cut

MUMBAI (Reuters) - India's air carriers want the sales tax on jet fuel to be slashed to a uniform rate of four percent across the country and import duty to fall to five percent in the forthcoming budget to ease cost pressures.

The Federation of Indian Airlines, which represents eight of the major airlines in the country, also wanted the fringe benefit tax on several offerings to go and tax exemptions for employing scarce pilots and engineers, it said in a statement.
"Excessively priced jet fuel in India is a long-standing and an unresolved issue, which is contributing to the large losses being incurred by the Indian airline industry," it said.
Jet fuel, which is almost three fourths costlier than international benchmarks, accounts for 40 percent of the operating cost of an Indian airline.
India's fast expanding air carriers lost an estimated half a billion dollars in the year to March 2007, hit by low fares due to competition and high fuel cost.
The quick expansion has also resulted in a shortage of trained crew, and that is why airlines want tax exemption for hiring foreign pilots and technicians.
"The industry has to find pilots in competition with airlines operating in the Middle East and Far East, where there are either no taxes or very little taxes," Siddhant Sharma, executive chairman of budget carrier, SpiceJet.
"In such a case, the airlines in India have to absorb the taxes to be able to attract pilots."
The federation of Indian airlines estimates the unmet demand for pilots in the Indian aviation industry at more than 4,500.
India's aviation market has expanded by more than a fourth over the last 2-3 years and carriers have ordered 453 planes worth $28 billion.
The federal budget for 2008/09 will be presented on Feb. 29.