The Federation of Indian Airlines (FIA), which represents all the airlines int eh country, has recommended that the government reduce the tax on Aviation Turbine Fuel (ATF) to 4 per cent.

Domestic airlines are facing cash crunch and are urging the government to help them control costs by reducing the taxes on aviation turbine fuel, as it accounts for about 50 per cent f their operating cost. The representative body has prepared a set of recommendations for the Union Budget under a wish-list from the industry. FIA is also requesting the country's finance minister for holding a meeting at the end of the month.

While the southern Indian state of Andhra Pradesh charges 4 per cent tax of ATF, the airlines have to shell out between 23-42% in other states in the country, which increases their costs.

"We hope that the ministry considers our proposal. If ATF is included in the `declared goods' category, as we want, it will attract a uniform tax across India. Indian companies are trying hard to trim costs, but ATF prices are beyond their control," said A. Baijal, convenor, FIA.

The price of ATF increased from an average of $85 in 2010 to $115 for each barrel this year, without accounting for the high level of taxes in the country.