Due to the rise in the cost of aviation turbine fuel (ATF), the domestic airline player Indigo mentioned that its operations are being impacted and has asked for bringing the jet fuel beneath the GST.
The enduring conflict between Russia and Ukraine leads to a straight rise in the prices of crude oil. Post to reaching the $140 per barrel mark, crude oil prices are floating nearly about $100 per barrel mark.
In some former few weeks, the prices of the crude oil have been increased to a 7 year high nearing about $140 per barrel, IndiGo CEO Ronojoy Dutta stated. It is due to the current going conflict in Europe. The same would result in an over 50% ATF price rise from January 2022 to date along with an 18% rise.
“This situation adversely impacts us, given that ATF constitutes over 45 percent of our operational costs,” he added.
Dutta added that the airline is in discussion with the government to draw the ATF beneath the GST as this would draw the advantage of the ITC. “We believe 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,”.
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Rationalization of taxes would result in a much more rise for the sector and build a multiplier effect all across the economy, promoting trade, tourism, and job creation, Dutta said.
While a Vistara spokesperson said that airfares are the function of the market dynamics and are decided on the grounds of various factors such as the balance of the demand and supply, market sentiment, competition, etc
“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 told.
Before this month, the union government specifies the lifting curbs on international air travel from the date 27 March, after two years.
