New Delhi, March 29 The Ministry of Civil Aviation is exploring various options to minimize the impact of the West Asia conflict on airlines, including engaging with state governments to reduce taxes on jet fuel.
The operational costs of Indian airlines are spiraling due to rising oil prices and airspace restrictions in the wake of the West Asia turmoil, involving the US, Israel, and Iran, which began on February 28.
A highly placed source said that the ministry was considering multiple options as part of a broader effort to reduce the impact of the West Asia conflict on the airlines.
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 approximately 40 per cent of an airline's total operational costs.
The Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) varies from state to state.
For instance, VAT on jet fuel is 25 per cent in Delhi and 1 per cent in neighboring Uttar Pradesh.
In the wake of the West Asia conflict, airlines 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 consumption.
Amid rising oil prices, the government has cut excise duty on petrol and diesel this week. An additional excise duty on the export of diesel and ATF has also been increased, aimed at prioritizing their domestic availability.
According to the highly placed source, the aviation watchdog, DGCA, is in contact with its counterparts in other countries regarding the evolving situation in West Asia.
On March 26, DGCA (Directorate General of Civil Aviation) chief Fiaz Ahmed Kidwai said that airlines were facing significant challenges and their operating costs were increasing.
"… we hope to see better days," he said, emphasizing that the DGCA was trying to promote ease of doing business for airlines to help them grow and flourish, as well as taking steps for passenger rights.