Indore: Civil Aviation Minister Ajit Singh on Saturday said state taxes on aviation turbine fuel (ATF) should come down as high jet fuel prices are impacting fares of the airlines struggling with high costs and fierce competition.

"ATF costs have risen 8 to 9 percent in March, and it would impact the air fares," Singh told reporters, after inaugurating the integrated airport terminal, built at the cost of Rs 135 crore, here.

Airlines would have to decide the fares based on commercial calculations, factoring in ATF costs, etc, he said. The Minister said taxes on ATF in some states have risen too steeply, up to 30 per cent, and they should come down, so that air connectivity to small towns increases.

"Let the reduction in tax start from Madhya Pradesh as the Chief Minister promised in his speech," Singh said, pointing to Shivraj Singh Chouhan, who was also present.

Airlines should woo passengers from tier 2 and 3 cities by increasing the connectivity, he added. The Ministry would be spending Rs 67,000 crore for infrastructure development and low-cost airports in the 12th Five-Year Plan, Aviation Secretary Naseem Zaidi said.

As to the FDI in the aviation, the Union Minister said the final decision has to be taken by the cabinet.

On the trouble-ridden Kingfisher Airline, Singh said it has been directed to keep the schedules, ensure safety of passengers and maintain the employee strength. The company was following the rules for the last one month, he said, adding that as long as it follows rules, its licence would continue.

National carrier Air India has got a relief package, and been asked to follow the industry norms, he stated.

As to the closure of private flying clubs between March 31 to April 4, Ajit said that closure was revoked after talks, and the clubs would not be shut down.

Earlier, during his speech, the Union Minister said a cargo terminal for perishable fruits and vegetables was also in the offing at the old Indore air terminal.

Speaking on the occasion, Chouhan said the state government is keen on developing connectivity, and 22 out of the 50 districts have got air strips for small planes. Union Minister of State for Industry and Commerce, Jyotiraditya Scindia, demanded that Gwalior be taken up for an integrated airport terminal after Indore.