Rising crude prices increased ATF costs by 400%

Mumbai: In the midst of rising prices, air travel can also become expensive. With the cost of aviation turbine fuel (ATF) increasing by 200 per cent, airlines may once again raise fares. The Union Civil Aviation Minister has hinted at a price hike.

In India, 11% excise duty is levied on ATFs and state governments levy VAT ranging from 1% to 20%.

Union Civil Aviation Minister Jyotiraditya Scindia said in a statement that if the airfare limit for domestic air travel is not increased, the operations of airlines in India will be hampered.

Arguing behind the price hike, the minister said that due to global factors, fuel prices have risen due to shortage of fuel. In the last eight months, the price of crude oil in the international market has risen from ૨૨ 5 a barrel to a record high of ૮૫ 3 a barrel.

He further said that Air Fuel (ATF) accounts for about 50 per cent of the total expenditure of the country's airlines. Looking at the ATF's share of inflation figures and costs, it is clear that the cost of airlines has quadrupled.

Earlier on August 15 this year, the Ministry of Aviation had raised the lower and upper limit of domestic fares, making domestic air travel more expensive. The ministry has raised the lower limit for flights up to 30 minutes by 11.5 per cent to Rs. 2,500 to Rs. 2,200.

At the same time, the upper limit for these flights has been increased by 12.5 per cent to Rs 2,500. Apart from this, 11 per cent excise duty is levied on ATFs and VAT ranges from 1 per cent to 20 per cent by state governments.

In the last 30 days, Jammu and Kashmir, Andaman and Nicobar Islands, Ladakh, Uttarakhand, Himachal Pradesh and Haryana have reduced the VAT on ATF from 2-3 per cent to 1-2 per cent.