Business
Airlines seek to keep Delhi ATF VAT at 7%
The Hindu BusinessLine·
The Federation of Indian Airlines asked Delhi to keep 7 percent VAT on aviation turbine fuel beyond November 16, The Hindu BusinessLine reported. In an October 19 letter to Chief Minister Rekha Gupta, FIA said ATF now makes up about 50 to 55 percent of operating costs. Delhi cut the rate from 25 percent to 7 percent in May.
Prism
What It Means For You
- ATF in Delhi stands at about Rs 137 per litre after the October 1 revision.
- FIA said fuel uplift in Delhi has risen 40 percent since the VAT cut.
- Continuation of the lower rate would affect airline costs through the capital hub.
What's Happening
- FIA represents IndiGo, Air India and SpiceJet in the request.
- The letter cites airspace restrictions, longer routings and higher fuel burn.
- BusinessLine said prices rose about Rs 16 per litre in October.
Why carriers want the relief extended
- Airlines say ATF usually makes up 30 to 40 percent of operating costs.
- Rupee depreciation has raised fuel, lease, maintenance and insurance costs, FIA said.
- The May reduction was introduced as fuel costs rose during geopolitical tension.
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