• Wed. Oct 5th, 2022

National airline industry calls for rationalization of ATF taxes

ByKimberly A. Brochu

Mar 16, 2022

Indian airlines have called for a streamlining of kerosene taxes to counter the massive rise in fuel prices.

On Wednesday, high crude oil prices led OMC to raise ATF prices to over Rs 1 lakh per kilolitre. In the national capital, the price of jet fuel was increased by 18.32% to Rs 1,10,666.29 per kiloliter (kl) from Rs 93,530.66 per kl.

In the other metropolitan cities of Kolkata, Mumbai and Chennai, the price has been increased to Rs 1,14,979.70, Rs 1,09,119.83 and Rs 1,14,133.73 per kl, respectively.

The rise came as the price of crude oil remained at elevated levels due to the Russia-Ukraine crisis. Fuel retailers revise jet fuel prices fortnightly.

“Over the past few weeks, crude oil prices have reached a seven-year high, approaching $140 a barrel, due to the ongoing conflict in Europe. ‘ATF from January 2022 to date, including 18% increase today,” said Ronojoy Dutta, full-time director and CEO of IndiGo.

“This situation affects us negatively, given that ATF accounts for over 45% of our operational costs. We have been in discussions with the government to subject ATF to GST, as it benefits from the input tax credit “, added Dutta.

According to Dutta, such measures are needed more than ever to offset this rising cost and make flying viable for airlines and affordable for consumers.

“A rationalization of taxes will result in strong growth for the sector, creating a multiplier effect throughout the economy, promoting trade, tourism and job creation,” said Dutta.

In India, domestic ATF prices are derived from international fuel prices, denominated in US dollars, which makes ATF prices sensitive to exchange rate fluctuations.

Notably, the Rupee has also seen a depreciation against the US Dollar lately, which has been reflected in the prices.

ATF prices are much more expensive than international benchmarks due to high levels of taxation.

The industry has demanded that the type of fuel be subject to GST, similar to the status given to “Bunker Diesel” which is used in the shipping industry.

A Vistara spokesperson said: ‘The resumption of scheduled international flights from March 27 is expected to boost demand and we hope will help the industry manage rising ATF prices.’



(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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