Centre slashes excise duty on jet fuel from 14 per cent to 11 per cent

The government was already mulling the decision for few days amid growing pressure from the industry lobby on behalf of ailing aviation sector.
For representational purposes (File | Reuters)
For representational purposes (File | Reuters)

NEW DELHI:  In a major relief to airlines burdened by high fuel costs, the government on Wednesday slashed excise duty on jet fuel from 14 per cent to 11 per cent to help keep airfares under check, ahead of the festive seasons. The government was already mulling the decision for few days amid growing pressure from the industry lobby on behalf of ailing aviation sector. 

A notification issued by the Revenue Department of the Finance Ministry said the duty change would “come into force with effect from the 11th day of October 2018.” Excise duty on jet fuel was last increased in March 2014 from 8 per cent to 14 per cent. The move will help to keep the fare under check ahead of the festive season. The airlines were already reeling under the pressure of high aviation turbine fuel (ATF) prices, which has gone 7.25 per cent in October alone. 

A weaker rupee has added to the pressure and badly impacting the finances of the airlines.  Airlines were already complaining that the high fuel cost is leaving them limited headroom to remain competitive and profitable at the same time in the extremely price sensitive market.

Earlier, the government had slashed excise duty on petrol and diesel by Rs 1.5 per litre and asked state-run fuel retailers to absorb Rs 1 per litre of to give consumers some relief from higher fuel prices, which has gone up on account of price hike in the international crude market.

An excise cut will also help offset a part of the impact of the customs duty increase last month. Aviation stocks were already in high demand Wednesday, surging up to 8 per cent as the government had hinted a likely cut in excise on ATF. 

Shares of Jet Airways soared 7.78 per cent to end at Rs 189.15, while SpiceJet spurted 4.37 per cent to Rs 68.10 on BSE. Shares of InterGlobe Aviation climbed 2.98 per cent to Rs 745.75. ATF is one of the biggest costs in airline operations.

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