Indian airlines’ operational costs are spiralling due to surging oil prices and airspace curbs in the wake of West Asia turmoil, involving the US, Israel and Iran, which began on February 28.
New Delhi:The civil aviation ministry is exploring multiple options to minimise the impact of the West Asia conflict on airlines, including engaging with state governments to cut taxes on jet fuel.
Indian airlines’ operational costs are spiralling due to surging oil prices and airspace curbs in the wake of West Asia turmoil, involving the US, Israel and Iran, which began on February 28.
A highly placed source said the ministry was considering multiple options as part of larger efforts to reduce the impact of the West Asia conflict on the carriers.
Civil Aviation Minister K Rammohan Naidu and the ministry have initiated discussions with chief ministers and state governments on the possibility of reducing taxes on jet fuel, the source said.
Jet fuel accounts for around 40 per cent of an airline’s total operational costs.
The Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) vary from state to state.
For instance, VAT on jet fuel is 25 percent in Delhi and 1 percent in neighbouring Uttar Pradesh.
In the wake of the West Asia conflict, carriers have also curtailed their scheduled services, especially to the region, and the airspace restrictions are forcing them to take longer routes for European and North American destinations, resulting in increased fuel burn