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Informist, Tuesday, Oct. 6, 2026

 

--Airlines request govt to cut landing, parking charges amid West Asia war

--Airlines body requests govt to cut landing, parking charges by 25%

--Airlines body requests govt to move to fixed-rate excise duty structure

--Airlines request govt to move to cost plus pricing model for ATF pricing

 

NEW DELHI – The Federation of Indian Airlines has urged the Civil Aviation Ministry to extend the sops announced in April to ease the financial pain on the airline industry, spurred by the conflict in West Asia. The body, representing Air India, InterGlobe Aviation Ltd.-run IndiGo, and SpiceJet Ltd., sought continuation of a price cap on aviation turbine fuel, reduction in value-added tax on jet fuel, cut in landing and parking charges for domestic flights, according to the letter dated Sept. 25, accessed by Informist. 

 

The industry body also requested the ministry to move to a 'cost plus' pricing model for the pricing of aviation turbine fuel, as against the benchmark pricing followed currently. Key issues such as airspace restrictions and diversions, rupee depreciation, rising operational costs, and an exorbitant rise in aviation turbine fuel costs have been impacting the financials of the airlines, the letter said. 

 

"Given that the underlying geopolitical and fuel-price pressures continue, it is critical that these measures are continued and strengthened to prevent further deterioration in the financial position and operational resilience of Indian carriers," the letter said. 

 

Airlines have argued that they have made detailed representations to the government for months highlighting the impact of the cost factors on airline operating costs and financial sustainability. The fuel component, which earlier constituted around 30–40% of airline operating costs, has now increased to around 55–60%. 

 

Additionally, airspace restrictions due to the war in West Asia, and neighbouring countries, have resulted in longer flight routes, leading to higher fuel consumption, increased crew costs, and lower aircraft utilisation, the body said. Airlines are also facing additional pressure from the depreciation of the rupee, as fuel, aircraft leases, maintenance, and insurance are largely linked to the US dollar.  

 

The industry body shared a four-point agenda with the ministry, wherein it said, "We request your good office to consider the following immediate steps to tide over the ongoing West Asia conflict and to support the aviation sector during these challenging periods."

 

ATF PRICING 

The federation demanded that the fuel prices for domestic operations be on a 'cost plus' pricing basis instead of an international benchmark as it is the single largest variable cost for airlines. The fuel costs were propelled by geopolitical disruptions and rupee depreciation, which are placing significant pressure on airline cash flows and viability, it said.

 

Airlines have argued that the war in West Asia has pushed prices of Brent Crude to up to $118 per barrel from $72 before the war broke out. This surge has increased the prices of jet fuel, calculated as a combination of international benchmark pricing and a premium charged by the refiner, to $260 per barrel from $87 before. The Federation of Indian Airlines, therefore, requested the government to review the pricing formula to mitigate the impact of an abnormal crack, caused by the differential between Brent and the Persian Gulf benchmark--Mean of Platts Arab Gulf--by moving into a 'cost plus' pricing model.

 

EXCISE DUTY RATIONALISATION

Presently, the excise duty of 11% is levied as a percentage of the aviation turbine fuel price. The industry has previously argued that excise duty on jet fuel be converted from a percentage-based levy to a specific fixed-rate levy, so that the tax burden does not escalate automatically when fuel prices rise. Such a measure would provide a relief to the industry, and support affordable and reliable air connectivity for the public, the industry body said.

 

CONTINUATION OF VAT RELIEF

The Federation of Indian Airlines requested that the value-added tax relief extended by the Delhi and Maharashtra governments provide 'some' support to financially challenged airlines. The current 7% VAT is valid only till the middle of November, for which the industry said, "We would request your good office to have the same regularised to 7% on an ongoing basis. The withdrawal or reversal of this relief would directly increase ATF costs at two of India's most important aviation markets and further compound the financial stress faced by airlines and may lead to network optimization (optimisation) at key airports".

 

Additionally, it urged the government to discuss the reduction of VAT with Tamil Nadu, West Bengal, Karnataka, and Telangana, which currently charge VAT at 16-29%.

 

RATIONALISATION OF AIRPORT CHARGES

The ministry of civil aviation reduced landing and parking charges by 25% for domestic flights for three months in April. The body now demands the ministry to extend the 25% pricing reduction till the West Asia war settles down and airline operations are reverted to near normalcy. 

 

The letter was also sent to the finance minister, petroleum and natural gas minister, and the prime minister's advisor Tarun Kapoor.  End

 

Reported by Pratyush Kumar

Edited by Akul Nishant Akhoury

 

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