Jet Fuel Duty Hike in Budget comes as Unpleasant Surprise for Airlines

Mumbai: At a time when the domestic airline companies have been trying to stage a turnaround financially on the back of decreasing aviation turbine fuel (ATF) prices, the Union government’s decision to increase the excise duty on jet fuel to 14% from 8% came as an unpleasant surprise to them. However, the finance minister’s announcement that the maintenance, repair and overhaul (MRO) sector has been given exemptions from paying the customs, excise and other kind if duties will help foreign and domestic airlines to maintain and repair their aircraft in India comes as welcome move. Fuel prices which constitute 35-40% of the total operating cost of an airline and all the indigenous airlines have been asking for a reduction in taxes on ATF to sustain the current levels of growth. Consequently the airlines may decide to hike passenger fares to cope with the recent increase in the excise duty in the coming days.


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