Aniket Pujari
ATF prices in Delhi were reduced to ₹87,597.22 KL this morning from ₹93,480.22 Kl earlier, a decline of ₹5,883. Jet fuel will now cost ₹90,610.80 Kl, down ₹5687.64 from ₹96,298.44 Kl.
OMCs have reduced the price of jet fuel Mumbai to ₹81,866.13 Kl from ₹87,432.78 Kl, implying the price has been cut by ₹5566.65. The highest price drop of ₹6,099.89 came in Chennai as ATF in the city now costs ₹90,964.43 Kl down from ₹97,064.32 Kl earlier.
The effect of the pricing dynamics is particularly critical for Indian carriers, as they remain highly attuned to any shifts in jet fuel costs. As much as 40% of their operating expenses are attributed to jet fuel, thereby making them significantly sensitive to such fluctuations.
Based on the average rate of international benchmark and foreign exchange rates, the ATF price is revised on the first of every month.
It remains to be seen if the reduction of cost of jet fuel will lead to a cooling off of air ticket prices.
Separately, in September, Tarun Kapoor, Advisor to the Prime Minister’s Office (PMO), stated that the government is working to bring aviation turbine fuel (ATF) and natural gas under the Goods and Services Tax (GST) regime within this financial year.
Speaking to CNBC-TV18, Kapoor confirmed that discussions are underway to implement this shift, which has been a long-standing demand from various sectors, especially aviation and energy.
Currently, ATF and natural gas fall outside the GST regime and are subject to state-level taxes, including excise duty and value-added tax (VAT). These taxes vary across states, significantly increasing operational costs for industries such as airlines, which have long sought uniformity in taxation. For instance, ATF can attract VAT rates as high as 30% in some states.
The inclusion of ATF and natural gas under GST would simplify the tax structure and potentially reduce the overall burden on these sectors.
