In what is set to be a big sigh of relief for airlines, the government has announced a cut in the excise duty on Aviation Turbine Fuel (ATF) from the current 14 per cent to 11 per cent. The reduced excise duty is effective from today.
The revenue department made this announcement through a notification yesterday.
The airline industry has been under pressure of late, with the high cost of jet fuel prices coupled with a falling rupee impacting their finances.
Jet fuel typically accounts for around 30-40 per cent of the operating costs of airlines, with the increase in jet fuel prices having a direct impact on the profitability of airlines. According to a report by Livemint, there has been a 33 per cent increase in the price of jet fuel in the first half of this financial year.
The government had recently announced an excise duty cut on petrol and diesel recently, cutting the excise duty by Rs.1.50 per litre.
Fuel prices have touched new highs of late, with petrol breaching the Rs.90/litre barrier in certain places. The reduction in the excise duty on jet fuel could help airlines operate efficiently without burdening consumers with additional costs.
Sources: Moneycontrol, Livemint, Financial Express