The government on Thursday said that the Rs10,000 crore price stabilisation fund for jet fuel would be optional for domestic airlines, and the base rates, exclusive of all taxes, would be Rs86.32 per litre for domestic flights and Rs104.49 per litre for international flights.
According to Rohit Raj, Director, Ministry of Civil Aviation, after accounting for levies such as value-added tax (VAT) and excise duty, the eventual price would be Rs115 per litre under the fund for both domestic and international flights.
He further mentioned that once an airline signs an MoU for support under the fund, it would have to pay the fixed rates even if international rates decline. The official added that airlines would be able to exit the scheme only after paying their outstanding dues.
"Under the new mechanism...we are moving towards a fixed price mechanism.. that is fixed at FOB level, where we are excluding certain charges and taxes, particularly VAT (value added tax), excise duty, airport charges, and a fixed differential, which is basically domestic freight and insurance and profit margin of OMC. After that, we arrive at a price under the scheme. For domestic operation it is fixed as at Rs 86.32 and for international operation it is fixed at Rs 104.49," he said, while adding, "If we take Delhi as an example, Rs 115 is the fixed selling price at Delhi for both domestic and international".
Noting that VAT on ATF for domestic flights differs across states, he said: "If we take an example of Mumbai, the prices of ATF under this arrangement, the selling price would be around Rs 114.5 and if you go to Chennai, because again there the VAT rates are pretty high, it is around Rs 139."