Hit by ATF price hike, IndiGo calls for bringing it under GST

Domestic airline IndiGo on Wednesday said it has been adversely impacted by the rise in cost of aviation turbine fuel (ATF) and called for bringing the jet fuel under the Goods and Services Tax (GST).

The ongoing conflict between Russia and Ukraine has led to a sharp increase in crude oil prices. After touching $ 140 per barrel mark, crude oil prices have cooled down a bit to around $ 100 per barrel mark.

In a statement, IndiGo CEO Ronojoy Dutta said that over the past few weeks, crude oil prices have soared to a seven-year high nearing $ 140 per barrel, due to the ongoing conflict in Europe. This has resulted in over 50 per cent ATF price hike from January 2022 till date, including the 18 per cent hike on Wednesday.

“This situation adversely impacts us, given that ATF constitutes over 45 percent of our operational costs,” he said.

Also Read: Will bring issue of ATF inclusion in GST during next Council meet: FM Sitharaman

Dutta said that the airline has been in talks with the government to bring ATF under GST as it will bring the benefit of input tax credit. “We believe that such measures are needed now more than ever to offset this increase in cost and make flying viable for airlines and affordable for consumers,” the statement said.

Rationalization of taxes will result in high growth for the sector and create a multiplier effect throughout the economy, promoting trade, tourism and job creation, Dutta added.

Meanwhile, a Vistara spokesperson told news agency PTI that airfares are a function of market dynamics and are 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 is expected to stimulate demand and we hope it will help the industry in managing the increase in ATF prices,” he said.

Earlier this month, the Central government announced lifting of curbs on international air travel from March 27, after two years.

(With inputs from PTI)

Also Read: India to lift embargo on international flights from March 27

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