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The Minister elaborated on the health of the sector and the wide-ranging issues that are presently affecting the sector so that the Government could take a view on the possible remedies for the sector. The Government has now decided to form a Group of Ministers (GoM) to consider the issues of (i) Sales Tax on Aviation Turbine Fuel (ATF) which is levied by the states and varies from state to state; and (ii) reduction of base price of the ATF by Oil Marketing Companies to bring it at par with international prices. In 2008, the growth rate in aviation sector witnessed a sudden decline at –4.7%. The growth for the period from Jan-July 2009 was –4.9%. The number of flights during Jan-July 2009 reduced by 12.5% year on year. This decline resulted in losses of connectivity and flight frequency especially to smaller cities, loss of premium and budget travelers, loss of jobs and reduction in employment opportunities. The industry losses in 2006-07 are pegged at Rs 2,000 crore and in 2007-08 at Rs 4,000 crore. In 2008-09, the expected losses are pegged at approximately Rs 8,000 crore. The ATF accounts for 40-45% of the operating cost of Indian carriers compared to global average operating cost of 25-30%. A reduction of even Rs 1000/KL translates to a saving of Rs 300 crore. In one year, ATF prices have risen by 99.6% while HSD and petrol prices rose by 14.9% and 17.9% respectively. The Minister also informed the Cabinet about the necessity to allow AAI to float Tax Free Bonds for Rs 5,000 crore to meet its 11th Plan commitments. He also spelt out the need for Government support for Air India by way of equity infusion to strengthen Air India equity base from the present level of Rs 145 crore and to facilitate the conversion of high cost debt into low cost debt. However, these two issues will be considered separately by the Government and will not be considered by this GoM.