June 24, 2014 / 9:45 AM / 3 years ago

Aviation minister says has asked states to cut jet fuel tax

A passenger aircraft is silhouetted against the rising moon in New Delhi May 7, 2009.B Mathur/Files

NEW DELHI (Reuters) - Civil Aviation Minister Ashok Gajapathi Raju said on Tuesday he had asked states to cut jet fuel tax, which the country's struggling airlines say makes it difficult for them to stay profitable.

Raju said he believed aviation turbine fuel (ATF) was "taxed on the higher side" and that states should "bring down" the tax, without indicating what he considered an appropriate level.

High taxes - many of them set by individual states rather than central government - low fares and a highly competitive market mean all but one of India's big airlines are losing cash. Fuel costs are among the highest in the region.

Shares in listed Indian airlines jumped after Raju's comments, with SpiceJet Ltd (SPJT.BO) closing up 10.03 percent and Jet Airways Ltd (JET.NS) up 6.55 percent in a market where the Nifty finished the day up 1.16 percent.

Raju was speaking at a news conference following the announcement that state-owned Air India had joined the Star Alliance group of carriers. Raju said the ministry expects the Star Alliance membership to boost Air India's revenues by around 5 percent.

Reporting by Tommy Wilkes; editing by Anand Basu and Jason Neely

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