"We all decide to import ATF rather than buy domestically if it brings down our costs...the actual user of imported ATF will not be subject to sales tax. This is certainly an option we are considering," Kingfisher Airlines' chairman, Vijay Mallya, said.

This will, however, require several logistical issues to be resolved before ATF can be actually imported, Mallya added.

The cost-structure and regulatory issues, if any, remains to be worked out, said Jet's executive director, Saroj Datta.

Imports would attract customs duty and hence "we will have to see how the costs ultimately work out," he said. Newly elected as the Federation of Indian Airlines chairman, Mallya has been mandated by airline operators in the country to represent them at various fora to take up their cause and especially on the issue of taxes which is hitting their bottomlines hard.

Mallya said that the domestic airline industry was likely to incur losses of around $2 billion. This also translates into a loss of revenue for the Government, he said.

"As an industry, we stand to lose around $2 billion and the ironical fact is that this revenue is earned by government either through taxation or ATF pricing," he said.

Making a case for sales tax reduction by state governments, Mallya said that "state Governments also earn huge revenues from airline companies and they should not have any hesitation in coming to our rescue by reducing sales tax."

On an average, states levy a 21 per cent sales tax on ATF, which amounts to almost 40 per cent of airlines' operating costs.

Earlier fuel and oil, which contributed to around 23 per cent of airlines' total input costs, have now shot up to nearly 50 per cent of total costs.

In a bid to exert pressure on state governments to slash sales tax, Mallya said that if they did not pay heed to the demand, air-carriers might cut back flights across destinations.

"If the government is unable, for whatever reasons to provide adequate relief, then we will have no option but to review our flight schedules. We may reduce frequency as well as snap connectivity in that eventuality," he said.

Asked if the airlines' were also mulling route-exchange with other air-carriers by way of dropping certain routes and extending it to other airlines, Mallya said, "I don't think so. Every airline has its own competitive advantage." 

Referring to the recent meeting with Prime Minister Manmohan Singh over a relief package for air-carriers, Mallya said that Singh was sympathetic to their demand and recognised the importance of the crisis the industry was going through.

"I have full confidence and hope that something positive will emerge," he said. Asked if the industry would witness another round of consolidation, especially amongst low-cost carriers, Mallya said that "we have some elasticity in terms of perseverence but it is rapidly running out."

The air carriers under the banner of the Federation of Indian Airlines (FIA), held a meeting to discuss rising international crude prices, the unprecedented hike in ATF prices and increase in charges by the airport operators.

The meeting also discussed the agenda for its scheduled meeting with the state Finance Ministers on Monday. The meeting was attended by Kingfisher Airlines' chairman, Vijaya Mallya, Jet Airways [Get Quote] chairman, Naresh Goyal, SpiceJet managing director, Siddhant Sharma, national air-carrier, Air India's director-commercial, Anita Khurana, GoAir, chairman and managing director, Jeh Wadia and officials from other airlines.