AVIATION TURBINE FUEL (ATF)
WHY IN NEWS ?
- Recently India’s oil marketing companies caused a stir in the aviation sector and among flyers last week when they announced a big hike in the price of aviation turbine fuel (ATF).
WHY THE ATF PRICES ARE HIKED ?
- In Delhi, the price of jet fuel or ATF—designed for use in aircraft surged to ₹112,419.33 per kilolitre, marking a 14.12% increase from August’s ₹98,508.26.
- This recent surge in airline fuel prices is the highest seen since December 2022.
- The combination of a weakening Indian rupee against the US dollar and the unpredictable international crude oil market serves as the primary driver of these increases.
- The impact of such an increase in price is felt more in India since states levy value-added tax (VAT) on ATF.
IMPACT ON AIRLINES :
- Jet fuel prices have increased for the third consecutive month.
- This fresh hike could mean a setback for the airline industry, which allocates 40-50% of its operating expenses to jet fuel.
- The post-pandemic recovery has been promising.
- In July this year, domestic air traffic surged a remarkable 24.7% from a year ago, totalling 12 million passengers.
- However, the ATF price hike now threatens to disturb this momentum.
INTERVENTION BY UNION GOVERNMENT:
- There is little that the Centre can do to reduce taxes on ATF since the states charge VAT on jet fuel.
- The Centre has been talking to states, trying to convince them to reduce the tax by 1-4%.
- The central government has been able to convince a large number of states and union territories till date.
- The aviation ministry is also discussing a proposal to bring ATF under the goods and service tax regime that will make taxes on jet fuel uniform across the country.
SYLLABUS: PRELIMS, CURRENT AFFAIRS
