Decision expected to lower airline operating costs amid rising global fuel prices and West Asia tensions
The Delhi government has sharply reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25% to 7%, offering major relief to airlines operating from the national capital and potentially easing pressure on airfares.
The decision was approved during a Cabinet meeting chaired by Delhi Chief Minister Rekha Gupta on Saturday.
Airlines To Benefit From Lower Fuel Costs
With the tax cut, airlines refuelling aircraft at Indira Gandhi International Airport will now pay significantly lower prices for jet fuel.
ATF is one of the biggest expenses for airlines, accounting for nearly 30-40% of operating costs. Industry experts believe the reduction could help carriers manage mounting financial pressure caused by rising global crude oil prices and ongoing geopolitical tensions in West Asia.
Fuel Prices Hit By Global Supply Disruptions
Airlines have been facing increasing fuel costs due to disruptions in global energy supply routes, especially around the Strait of Hormuz amid tensions linked to the Iran conflict.
Since VAT on aviation fuel is decided by individual state governments, the tax rate depends on where airlines purchase fuel rather than where flights are headed.
Maharashtra Also Reduced ATF Tax
The move comes shortly after the Maharashtra government announced a similar reduction in VAT on jet fuel, lowering the rate from 18% to 7% for six months starting May 15.
The twin tax cuts by two major aviation hubs — Delhi and Mumbai — are expected to reduce operational costs for airlines during the busy travel season.
Airfares May Stabilise
Experts say the VAT reduction could help airlines improve route planning, increase operational efficiency and prevent further spikes in ticket prices.
The decision is also expected to strengthen major airport hubs such as Delhi and Mumbai as competition within India’s aviation sector continues to grow.
