Civil Minister Praful Patel on Monday ruled out retrenchment among employees in public sector Air India and blamed rising fuel prices as the reason behind the present crisis in the aviation sector.

"I have categorically denied that there will be any retrenchment in Air India," he told reporters after the inauguration of the Rs 1808-crore Chennai airport expansion and modernisation project. He, however, declined to comment on the issue in the private sector.

Jet Airways [Get Quote] had last week decided to lay off about 1900 of its employees but withdrew the move promptly. The Kingfisher Airlines has announced a salary cut of its trainee pilots as part of cost-cutting measures.

Patel said prices of Aviation Turbine Fuel (ATF) have gone out of control and called for "rationalisation" of the same to manage the present crisis.

The rising prices have put an extra burden of Rs.7,000 to Rs 8,000 crore on the airlines operators who have in turn passed on the burden to passengers, he said and stressed the

need for states to reduce the sales tax levied on ATF.

"Most states levy a sales tax of 29 per cent on a commodity whose value has gone up, which also adds up to the overall cost," he said.

He also demanded a cut in other taxes, including customs and excise. "States should understand that better rational pricing brings more flights into their cities, helping in increased revenue..I hope all understand," he said.

He also said that unless a permanent solution was found, fears of retrenchment "will hang in the air."