Govt cuts excise duty on aviation fuel from 14% to 11%

New Delhi, Oct 10: In the wake of falling value of Rupee and sharp increase in fuel prices, the Union Government has decided to slashed excise duty on aviation turbine fuel (ATF) from 14% to 11%.

The airline companies are seeing a sharp dip in profits due to depreciating rupee, rising costs and hike in aviation fuel prices. The increase in aviation fuel price will soon be passed on to the consumers, which will make air travel costlier.

Leading oil refining and marketing company Indian Oil Corporation (IOC) announced that jet fuel or Aviation Turbine Fuel (ATF) prices would be up increased by Rs 5,016 per kilo litre (KL), or 7.25 per cent, from October 1. Fuel price hikes impact Indian aviation companies more than the foreign ones operating in the country.

Typically, fuel accounts for 24.2% of an airline company's costs. For Indian companies though, it accounts for 34% due to a lack of competition among those supplying fuel at Indian airports and hence there is little commercial incentive to keep fuel prices flexible.