The civil aviation industry in India is the most fiercely contested commercial paradigm in the country. Although many factors are often at play with regards to the success of an airline, one of the most crucial aspects that stands out is the element of Aviation Turbine Fuel or ATF, or simply Jet fuel.
Maharashtra Slashes VAT
In a recent development, the Maharashtra government has decided to slash tax or Value Added Tax (VAT) on jet fuel. The VAT on the said jet fuel has been lowered to 18 per cent. Previously, the rate of tax on the crucial fuel stood at 25 per cent.
This change is being attributed to the intention of easing the airline business and fostering civil aviation. This comes at a crucial time, as the aviation industry has expressed its discontent over the price of this commodity in the past. |
This change is being attributed to the intention of easing the airline business and fostering civil aviation. This comes at a crucial time, as the aviation industry has expressed its discontent over the price of this commodity in the past.
It is to be noted, that globally, airlines tend to earmark about 18–19 per cent of their total expenditure on jet fuel. Meanwhile, for Indian airlines, the number is said to be significantly higher, as in this part of the world, about 40 per cent of airline expenses are meant for jet fuel.
Maharashtra is also an important constituent in this matter, it is the most industrialised in the country and the state also houses two major cities, Mumbai and Pune.
Mumbai reportedly handled as much as 14 per cent of the international and domestic traffic in the country. | Pixabay
Mumbai Handles 14% India's Air Traffic
In fact, the business capital of the country, as Mumbai is often dubbed, reportedly handled as much as 14 per cent of the international and domestic traffic in the country in 2023.
An increase in the cost of procurement can easily hamper or make the operations of an airline fiscally cumbersome.
If reduction and the benefits of reductions are passed onto general customers, this could possibly lead to a decline in prices of tickets, thereby making air travel in cheaper in the country. This would be in accordance with the central government's aim of making air travel affordable.
