Civil aviation ministry looks at multiple options to minimise West Asia crisis impact on airlines

New Delhi: The civil aviation ministry is exploring multiple options to minimise the impact of the West Asia conflict on airlines, including engaging with state governments to cut taxes on jet fuel.

Indian airlines' operational costs are spiralling due to surging oil prices and airspace curbs in the wake of West Asia turmoil, involving the US, Israel and Iran, which began on February 28.

A highly placed source said the ministry was considering multiple options as part of larger efforts to reduce the impact of the West Asia conflict on the carriers.

Civil Aviation Minister K Rammohan Naidu and the ministry have initiated discussions with chief ministers and state governments on the possibility of reducing taxes on jet fuel, the source said.

Jet fuel accounts for around 40 per cent of an airline's total operational costs.

The Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) vary from state to state.

For instance, VAT on jet fuel is 25 per cent in Delhi and 1 per cent in neighbouring Uttar Pradesh.

In the wake of the West Asia conflict, carriers have also curtailed their scheduled services, especially to the region, and the airspace restrictions are forcing them to take longer routes for European and North American destinations, resulting in increased fuel burn.

Amid surging oil prices, the government has cut the excise duty on petrol and diesel this week. The special additional excise duty on export of diesel and ATF has been hiked, a move aimed at prioritising their domestic availability.

According to the highly placed source, aviation watchdog DGCA is in touch with its counterparts in other countries on the evolving situation in West Asia.

On March 26, DGCA (Directorate General of Civil Aviation) chief Fiaz Ahmed Kidwai said airlines were facing big challenges and their operating costs were going up.

"... we hope we see better days," he said and emphasised that the DGCA was trying to promote ease of doing business for airlines to help them grow and flourish, as well as taking steps for passenger rights.