New Delhi, May 16 (IANS) The Delhi government on Saturday announced a major reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), bringing the levy down from 25 per cent to 7 per cent in a move aimed at easing operational costs for airlines and providing relief to air passengers.
According to the Chief Minister’s Office, the decision is expected to lower fuel expenses for carriers operating from the national capital and help improve the overall viability of airline operations.
“Delhi government has decided to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 per cent to 7 per cent, a move which is likely to benefit the airlines and common passengers,” the official statement said.
The announcement comes just a day after the Maharashtra government reduced VAT on ATF to 7 per cent from 18 per cent for a six-month period starting May 15. The move by both states is aimed at cushioning airlines from mounting fuel costs amid elevated global crude oil prices and disruptions linked to tensions in West Asia.
ATF constitutes nearly 30 to 40 per cent of an airline’s operating expenses, making it one of the most critical cost components for the aviation industry. Airlines have been facing sustained pressure due to geopolitical uncertainties, supply chain disruptions, fluctuations in global crude markets, and periodic airspace restrictions triggered by conflicts in the Middle East.
The surge in fuel prices has significantly strained airline balance sheets in recent months, prompting carriers to recalibrate ticket pricing, particularly on high-demand domestic sectors during the busy summer travel season.
Industry observers believe the reduction in VAT is likely to provide immediate cost relief to airlines and may help stabilise airfares over the coming months. The move is also expected to support route expansion plans, improve operational efficiency, and encourage higher capacity deployment by reducing variable input costs.
–IANS
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