- By Aditya Pratap Singh
- Thu, 21 May 2026 03:15 PM (IST)
- Source:JND
In a move that will bring ease to the airline industry, two major aviation hubs in India--Delhi and Mumbai have reduced taxes on aviation turbine fuel (ATF). Delhi reduced its ATF VAT to seven per cent from 25 per cent for six months. Maharashtra also slashed Mumbai's ATF VAT for domestic flights to seven per cent from 18 per cent.
The move will be a significant help for airlines as the elevated jet fuel prices due to the US-Iran war have been putting pressure on companies' operational expenses.
However, despite the tax cut, travellers may not see much reduction in air ticket prices, as Indian aviation prices are primarily determined by demand-supply, rather than direct cost pass-through.
A Big Help For Airlines
A significant tax reduction could significantly improve operating costs for the airlines, as these two metro cities together account for a significant portion of India's passenger transport. Hence, these cities always have long-haul connectivity and aircraft refuelling activity.
The move comes after airlines warned the government that the fuel crisis threatens route viability.
According to reports, in an official communication to the Civil Aviation Ministry on April 26, the Federation of Indian Airlines said fuel costs had risen to 55 to 60 per cent of operating costs from 30 to 40 per cent before the conflict escalated. This organisation represents Air India, IndiGo, and SpiceJet.
Airlines Face Financial Pressure
Due to higher ATF prices, domestic airlines have suffered a lot of financial pressure, and the same can be seen in airlines' performances.
Air India has reduced its international flight routes to many countries. Meanwhile, India's largest airline, IndiGo, reported a 77.6 per cent year-on-year decline in net profit to Rs 549 crore in the third quarter of FY26.