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Jet Fuel Under GST? IndiGo CEO Urges Govt to Consider it After Massive Hike in ATF Prices

Jet fuel price has been hiked by 18 per cent to over Rs 1 lakh per kilolitre (PTI)

Jet fuel price has been hiked by 18 per cent to over Rs 1 lakh per kilolitre (PTI)

Private carrier IndiGo's chief executive office Ronojoy Dutta has urged to bring ATF under the ambit of Goods and Service Tax (GST).

Aviation Turbine Fuel or ATF prices have seen a steep rise over the past few months, and the hike seems to be in no mood to stop since crude oil prices too have been increasing due to restricted oil supply amid the situation arising Russia’s invasion on Ukraine. Under such circumstances, private carrier IndiGo’s chief executive office Ronojoy Dutta has urged to bring ATF under the ambit of Goods and Service Tax (GST).

The price of aviation turbine fuel has increased by 50 per cent since January and the situation has adversely impacted IndiGo, Dutta said on Wednesday.

The prices of jet fuel saw its steepest hike ever on Wednesday as they were hiked by as much as 18 per cent to an all-time high. This came after international oil prices surged to a seven-year high at $140 per barrel. The high crude oil prices led OMCs to hike ATF prices to more than Rs 1 lakh per kilolitre. In the national capital, the price of jet fuel was raised by 18.32 per cent to Rs 1,10,666.29 per kilolitre (kl) from Rs 93,530.66 per kl. In the other metro cities of Kolkata, Mumbai and Chennai, the price was increased to Rs 1,14,979.70, Rs 1,09,119.83 and Rs 1,14,133.73 per kl, respectively.

The rise came as crude oil price has remained on elevated levels due to the Russia-Ukraine crisis. Fuel retailers revise jet fuel prices on a fortnightly basis, on the 1st and 16th of every month.

Dutta said the government should bring aviation turbine fuel (ATF) under the Goods and Services Tax (GST) and make flying affordable for consumers and viable for airlines. IndiGo is India’s largest airline and with around 55 per cent share in the domestic passenger market.

Over the past few weeks, crude oil prices have soared to a seven-year high, nearing USD 140 per barrel, due to the ongoing conflict in Europe, Dutta said in a statement. “This has resulted in over 50 per cent ATF price hike from January 2022 till date, including the 18 per cent hike today, he noted. This situation adversely impacts us, given that ATF constitutes over 45 per cent of our operational costs, he stated. We have been in talks with the government to bring ATF under GST as it brings the benefit of input tax credit,” he noted.

“IndiGo believes that such measures are needed now more than ever to offset this increase in cost and make flying viable for airlines and affordable for consumers,” he said.

“A rationalisation of taxes will result in high growth for the sector, creating a multiplier effect throughout the economy, promoting trade, tourism and job creation,” Dutta noted.

Meanwhile, a Vistara spokesperson said airfares are a function of market dynamics and are decided on the basis of multiple factors like the balance of demand and supply, market sentiment, competition, among others. “The resumption of scheduled international flights from March 27 is expected to stimulate demand and we hope it will help the industry in managing the increase in ATF prices,” he added.

(With PTI inputs)

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first published:March 17, 2022, 13:00 IST