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IndiGo CEO Ronojoy Dutta has said the hike in the aviation turbine fuel price, which is at an all-time high, had adversely affected the airline and jet fuel should be brought under the goods and services tax (GST) regime to make flying affordable.
His comments after the jet fuel prices were hiked by 18.3 percent on March 16 that saw ATF soaring past the Rs 1-lakh-per-kilolitre mark for the first time, as crude prices have spiked in recent weeks over supply concerns following the Russia-Ukraine war.
The price was hiked by 17,135.63 per kl to Rs 110,666.29 per kl in the national capital, according to a price notification by state-owned fuel retailers
The government should bring ATF under the GST and make flying affordable for consumers and viable for airlines, Dutta said on March 16.
IndiGo is India’s largest airline, with around 55 percent share in the domestic passenger market.
Over the past few weeks, crude oil prices have soared to a seven-year high, nearing $ 140 a barrel, Dutta said in a statement.
This has resulted in over 50 percent ATF price hike from January 2022 till date, including the 18 percent hike, he said. This situation adversely impacts airlines, given that the ATF constitutes over 45 percent of operational costs.
They were in talks with the government to bring ATF under GST, as would bring the benefit of input tax credit, Dutta said.
Such measures were needed more than ever to offset the increase in cost and make flying viable for airlines and affordable for consumers, he said.
A rationalisation of taxes would result in high growth for the sector, creating a multiplier effect throughout the economy, promoting trade, tourism and job creation, he said.
A Vistara spokesperson said airfares were a function of market dynamics and decided on the basis of multiple factors like the balance of demand and supply, market sentiment, competition, among others.
The resumption of scheduled international flights from March 27 was expected to stimulate demand and help the industry in managing the increase in ATF prices, he added.
Unlike ATF, petrol and diesel prices continue to remain on freeze for a record 133rd straight day on March 17.
The daily price revision was put on hold on November 4, 2021, just as electioneering to elect new governments in states like Uttar Pradesh and Punjab started.
(With PTI inputs)