A committee headed by the Cabinet Secretary Mr K. M. Chandrasekhar, has recommended air fare cut to the Civil Aviation Ministry in a line with fall in prices of aviation turbine fuel. The committee was set up by government to examine the credit situation faced by aviation sector following global slowdown.

It has also asked to rationalize tax slab on aviation turbine fuel, besides giving a status of declared goods to jet fuel to bring down its prices. Declared goods status would ensure flat four per cent tax on fuel across the country.

The committee said that air traffic has reduced significantly due to the world financial crisis and civil aviation companies should take initiative by reducing air fares. Low fares would attract more traffic and helps to sustain the growth of the aviation industry.

Aviation sector is also impacted by depreciation of Rupee as compared to US dollar as substantial payments are made in dollars, while income is generated in Indian currency. The committee also reviewed the working of aviation sector after drop in crude oil prices. The other members of committee are the Secretaries of the Finance, Revenue, Petroleum and Civil Aviation Ministries, Planning Commission Secretary, HDFC Chairman Deepak Parekh and senior IIM Ahmedabad Professor Raghuram.