Mumbai: Domestic airlines, which have been hit hard by soaring fuel prices, is considering a "differential fuel surcharge" based on VAT rates in different states to partially offset their losses.

The suggestion of a differential fuel surcharge came up at an all-India civil aviation meet in Thiruvananthapuram attended by ministers and senior officials from various states.

"Airlines would not be able to survive if the cost of aviation turbine fuel (ATF) is so high and competition brings down the fares," Air India chairman and managing director V Thulasidas said.

"In some states, sales tax or VAT on ATF is as high as 30 or 35 per cent. The airlines would be forced to go in for a differential fuel surcharge," he said, adding they would otherwise have to close down.

He said the ATF surcharge would have to be pegged to VAT rates in the various states. If a state imposed less tax, ATF surcharge would also be low, he added.

Aviation fuel prices in India have been raised seven times in the past ten months, pushing up operating costs and hitting profitability of the airlines.

ATF prices in the four metros went up between 19 to 25 per cent during the last calendar year. Price of a kilolitre of ATF went up by as much as 20 per cent and costs Rs45,492.82 in Delhi now while it was Rs37,746.92 in January last year.

Aviation fuel price in India is almost double the global rates and accounted for 40 to 45 per cent of the expenditure of domestic airlines, compared to 18 to 20 per cent for airlines overseas, Thulasidas said.

Civil aviation minister Praful Patel has, meanwhile, been lobbying for lower duties on jet fuel. He also met finance minister P Chidambaram to discuss fiscal measures that could help the aviation industry tide over the rising aviation fuel prices.