There was a big sigh of relief among Indian carriers, worried that the current export taxes on petroleum products would negatively affect flights leaving the country. The authorities have clarified that it has rolled back excise duty on aviation turbine fuel (ATF) operated for international operations.
Indian government
The Indian government had recently set additional taxes on petroleum products (petrol, diesel, ATF) to curb the practice of private fuel companies exporting fuel. Due to the international fuel lack, Indian companies had begun exporting fuel, which had caused a lack in domestic supplies.
This rang alarm bells for Indian carriers, which sought clarifications from the government about whether the taxes would impact the costs of fuel bought for international operations.
The new rules had created confusion, leading oil companies to think that Indian carriers would have had to shell out an additional 11% excise duty for filling up the tanks for flights to foreign destinations. Naturally, this did not go down well with the carriers already reeling under the pressure of skyrocketing fuel prices.
India’s finance ministry has announced
Thankfully, India’s finance ministry has announced that ATF supplied as fuel to domestic carriers on international routes would continue to be exempted from essential excise duty from July 1st.
In a notification given on Thursday, the Ministry stated that the special additional duty on exports for ATF would not apply “when such goods are cleared for exports or given as fuel to foreign-going aircraft.”
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Aviation minister Jyotiraditya Scindia
Fuel accounts for more than 40% of operational prices for carriers in India, and the recent surge in costs following the Russia-Ukraine conflict is forcing domestic airlines to boost ticket prices. Recently, India’s aviation minister, Jyotiraditya Scindia, asked the finance ministry for tax cuts on jet fuel (ATF) to bring down costs.
Indian airlines are unable to post profits despite an increase in air traffic, which has largely been offset by enormous fuel costs. As such, the government’s decision to roll back additional fuel taxes on international flights is being welcomed by all airlines.
A report released by Booking.com suggests that approximately 86% of Indian travelers it surveyed said that they intend to travel in the next 12 months. This isn’t surprising as several international carriers are reporting great business from India.
Singapore Airlines recently stated that it has recovered nearly 75% of pre-pandemic capacity in India and remains hopeful of a full recovery by the end of this year.
Rating agency ICRA also believes that India’s air passenger volume will likely reach 96-97% of pre-COVID levels this financial year. In June alone, international traffic touched almost 80% of that seen before the pandemic.
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