Civil Aviation Ministry Contemplates Cutting Taxes On Jet Fuel

New Delhi: In a bid to minimize the impact of the conflict in West Asia on Indian airlines, the Union Civil Aviation Ministry is in talks with state governments to reduce taxes on jet fuel. The move comes at a time when many countries have started canceling flights as the extraordinary rise in jet fuel prices has sent shockwaves through the aviation industry worldwide.

While jet fuel prices have not yet increased in India, it has been learned that airlines have applied to the government to manage increasing costs, requesting reductions in taxes and airport fees. Jet fuel accounts for approximately 40 percent of an airline’s total operating costs.

In this context, the union government is exploring various options to minimize the impact of the West Asian conflict on airlines. Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) varies from state to state and ranges from 25 percent in Delhi to 1 percent in Uttar Pradesh.

Many carriers have already reduced their scheduled services specifically to the region, and airspace restrictions are forcing them to use longer routes for European and North American destinations, resulting in increased fuel consumption.

The Indian government has already reduced excise duty on petrol and diesel, and additional excise duty and ATF on diesel exports have been increased to prioritize their domestic availability. It was learned that the Director General of Civil Aviation is in contact with his counterparts in other countries about the developing situation in West Asia.

Meanwhile. The airlines will operate fewer flights on the current summer schedule as civil aviation authorities decided to be ‘a little more lenient’ in approving the number of services due to IndiGo’s major operational cuts last December. The ministry and DGCA do not want a situation similar to what happened with IndiGo in December last year.

The airline’s summer schedules were approved taking into account aircraft availability, number of pilots and other issues. In the domestic summer schedule, airlines will operate at least 10 percent fewer flights compared to the number of flights operated in the same period of the previous year.