State government charges a VAT of 29% on aviation turbine fuel. Airlines have resorted to increasing passenger and cargo fares
Flyers may be bearing the burden of the value added tax (VAT) charged by the State government on the increasingly expensive aviation turbine fuel.
Airlines officials said that they are charging more from passengers to make up for the huge amounts spent in refills in Chennai airport. They said that considering the difficulty in getting refills from other destinations, passing on the burden was the one of the ways out.
The State government charges a VAT of 29 percent on Aviation Turbine Fuel (ATF) and an average of 5.5 lakh kl is consumed per month at the Chennai airport, said officials at Airports Authority of India (AAI).
“We can’t get escape refilling the fuel in Chennai. Not only has it become exceedingly difficult to manage but there is not much we can do about it either. We have already made several requests to the governnment to at least bring down the VAT here,” said an official of SpiceJet who did not wish to be named.
Another airlines official said they had been forced to hike passenger fares to manage the high operational costs.
“We are forced to at least moderately push the air fares, thus causing inconvenience to passengers. And it’s not just passenger fares, we also increased the cargo rates. We cannot refill elsewhere and we have about 25 domestic departures from Chennai, which fill in here,” said an official of IndiGo.
Recently, Civil Aviation Minister Ajit Singh, at a conference in Delhi, observed that the airlines have suffered losses owing to high prices of ATF exacerbated by the weighty VAT imposed by State governments.