Is Jet Fuel Subject to GST: IndiGo CEO Urges Govt to Consider it under GST after hit massive hike in ATF Prices

Prices of Aviation Turbine Fuel, or ATF, have risen sharply in recent months, and the trend appears to be continuing, as crude oil prices have also risen due to limited supply in the aftermath of Russia’s invasion of Ukraine. In such situations, private carrier IndiGo’s CEO Ronojoy Dutta has pushed for ATF to be included in the Goods and Service Tax (GST).

According to Dutta, the price of aviation turbine fuel has jumped by 50% since January, and the scenario has negatively impacted IndiGo.

After international oil prices climbed to multi-year highs, jet fuel costs were hiked by almost 18 percent – the biggest ever increase – to all-time high levels on Wednesday.

This happened after international oil prices soared to $140 per barrel, a seven-year high.

Prices soared over the one-lakh-per-kilolitre threshold for the first time ever as a result of the rise, which was the sixth in a row this year.

Every month on the 1st and 16th, jet fuel prices are adjusted based on the average international price of benchmark fuel for the previous fortnight.

The price of jet fuel in the national capital was increased by 18.32 percent to Rs 1,10,666.29 per kilolitre (kl) from Rs 93,530.66 per kl. The price was increased to Rs 1,14,979.70, Rs 1,09,119.83, and Rs 1,14,133.73 per kilo in the other metro cities of Kolkata, Mumbai, and Chennai, respectively.

The government, according to Dutta, should include aviation turbine fuel (ATF) in the Goods and Services Tax (GST) to make flying more economical for customers and viable for airlines. IndiGo is India’s largest airline, with a domestic passenger market share of roughly 55 percent.

Due to the continuous war in Europe, crude oil prices have risen to a seven-year high, approaching USD 140 per barrel in recent weeks, according to Dutta. “This has resulted in a more than 50% increase in ATF prices since January 2022, including the 18% increase today,” he said. This circumstance has a negative impact on us because ATF accounts for approximately 45 percent of our operating costs, he said. “We’ve been in discussions with the government about bringing ATF under GST so that we may take advantage of the input tax credit,” he said.

“IndiGo feels that such steps are essential now more than ever to balance this cost increase and make flying sustainable for airlines while still remaining affordable for consumers,” he said.

“A tax reform will result in significant growth for the industry, having a multiplier effect throughout the economy, stimulating commerce, tourism, and job development,” said Dutta.

Meanwhile, a Vistara representative said that airfares are determined by market dynamics and are based on a variety of criteria such as demand and supply balance, market sentiment, and competitiveness, among others. “We expect the resumption of scheduled international flights on March 27 to drive demand, and we believe it will assist the industry in managing the increase in ATF prices,” he added.

Source: News 18 & Livemint