ATF Tax Relief: India’s two largest aviation hubs Delhi and Mumbai have made a major reduction in VAT on Aviation Turbine Fuel i.e. ATF. This decision is expected to provide relief to airlines from rising costs, especially at a time when global fuel prices, weak rupee and operational expenses are rising rapidly.

How much tax reduced in Delhi and Mumbai?

If we talk about tax, Delhi has reduced VAT on ATF from 25 percent to 7 percent. This relief has been implemented for six months. Whereas Maharashtra has reduced VAT on ATF for domestic flights in Mumbai from 18 percent to 7 percent. This decision has come at a time when airlines were struggling with rising fuel prices and had warned the government about increasing costs.

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Fuel crisis increases the difficulties of airlines

The aviation sector is currently facing a huge fuel crisis. The Federation of Indian Airlines (FIA), which includes companies like Air India, Indigo and SpiceJet, had warned the government that many routes were becoming economically unprofitable due to rising fuel costs. According to FIA, earlier fuel cost used to be about 30 to 40 percent of the total expenses of airlines, but now it has increased to 55 to 60 percent.

impact of global stress

The impact of ongoing tensions in the Middle East and supply disruptions around the Strait of Hormuz was also visible on jet fuel prices. A large part of the oil and LNG supply around the world passes through this route. While at the end of February 2026, the price of jet fuel was around $99 per barrel, by May 2026 it increased to around $263 per barrel.

Why are Delhi and Mumbai so important?

According to figures disclosed by Chief Minister Rekha Gupta, Delhi’s Indira Gandhi International Airport handled around 8 crore passengers in 2024-25, while Mumbai Airport handled 5.55 crore passengers in 2025 and recorded a movement of more than 3,31,000 aircraft. Most of the domestic and international flights in the country operate from these two cities. This is the reason why the effect of reduction in tax on fuel will be visible on the entire aviation sector.

Increasing consumption of ATF

The demand for ATF is continuously increasing in India. According to government data, about 764 thousand metric tons of ATF was consumed in the country in February 2026. Whereas in 2025, domestic airlines will carry about 167 million passengers. Amidst such huge demand, even a little relief in fuel prices can prove to be a big saving for airlines.

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Increasing financial pressure on airlines

Airlines are already facing many financial challenges. Increasing lease rentals, shortage of aircraft, technical problems in engines, maintenance expenses and weakness of rupee against the dollar have increased the problems of the companies. Its effect is also visible on the performance of companies. Air India has stopped some international flights like Chicago, Newark and Shanghai, while the number of flights on many routes has been reduced. On the other hand, IndiGo’s net profit fell by about 77.6 percent in the third quarter of FY 2026.

There may be a reduction in fuel tankering

The reduction in ATF tax may also impact the fuel strategy of airlines. Till now many airlines adopted fuel tankering strategy. That is, she used to get more fuel filled at low tax airports so that she does not have to take fuel again at expensive airports. However, this increased the weight of the aircraft and affected the fuel efficiency. Experts believe that due to lower taxes in Delhi and Mumbai, the need for such strategies will reduce.

Will air tickets be cheaper?

There is less possibility of passengers getting cheap tickets immediately after the tax cut. Fares in Aviation Sector: Fares in the sector are not determined only by cost, but demand and supply also play a big role in it. At present, passenger demand remains strong, while flight capacity is limited due to shortage of aircraft and technical problems. In such a situation, airlines will first try to reduce their financial pressure.

States will suffer revenue loss

This decision will also cause loss of revenue to the state governments. Delhi government estimates that it may suffer a loss of around Rs 985 crore due to VAT cut. Maharashtra is expected to suffer a revenue loss of Rs 550 to 600 crore annually. After this, both the governments believe that this step will help in maintaining their cities as strong aviation hubs.

Demand to bring ATF in GST intensifies

Amidst this entire issue, the old demand of the aviation industry has once again intensified that ATF should be brought under the ambit of GST. At present, different VAT is applicable on ATF in different states and airlines are not able to avail the benefit of input tax credit. The industry believes that if ATF is included in GST, fuel costs can be stabilized across the country.

American Spirit Airlines Cancels Flight: Due to the US-Iran war, oil prices are increasing across the world. Aviation industry has also not remained untouched by this, the effect of increase in ATF prices is also becoming increasingly visible. Many airlines are canceling some of their flights, while many are being closed completely. In this series, American Spirit Airlines has also decided to cancel its flights with immediate effect.

Spirit Airlines flights canceled
According to the Economic Times report, America’s low-cost Spirit Airlines has decided to temporarily cancel all its flights due to the pressure of rising fuel prices. The company says that due to the rapid increase in international crude oil prices, the cost of operation has increased significantly, making it economically difficult to run flights at the current fares.

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Statement from the airline
Talking about this decision, Dave Davis, President and Chief Executive Officer of Spirit Airlines, said, ‘Spirit Airlines has played a role in making travel accessible and bringing people together for more than 30 years, while also contributing to ensuring affordable rates throughout the industry.’ He further said that he had prepared a restructuring plan in the meeting with his bondholders in March 2026, but this decision has been taken due to the sudden increase in fuel prices.

Know what is the refund process?
For the convenience of the passengers, the airline has said that the money of the passengers who have purchased tickets directly through credit or debit card will be automatically refunded. Those who had booked tickets through travel agents will have to contact their agents for refund. At the same time, the decision on money or compensation for bookings made through vouchers, credit or loyalty points will be taken later during the bankruptcy process.

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Let us tell you that after the news of increase in fuel prices yesterday, Air India has also canceled 100 of its daily flights. This decision has come after the increase in fuel prices. In such a situation, advisory is also being issued to save the passengers from inconvenience.

SpiceJet, one of the largest airlines in the country, is currently going through very difficult circumstances. Due to which the company has decided to reduce the staff working with it. The company has decided to reduce 20 percent of its staff to deal with this financial crisis. If reports are to be believed, the company is soon going to send many of its employees on temporary leave without paying salaries.

Senior officers did not get salary
At present there are 6,800 employees in the company, many of whom will be eliminated in the retrenchment. So the company has only 13 planes left, which include 10 Boeing planes and 3 Q400s. Apart from this, 14 planes are also running on lease. Amidst its financial troubles, the company has not even paid 2-3 months’ salary to other senior employees. More than Rs 100 crore of TDS and PF is still pending.

SpiceJet is deep in debt
This problem is coming because SpiceJet has a lot of debt. Recently, the English court has ordered the airline to pay approximately Rs 68 crore in the dispute related to aircraft lease. Due to this new decision, the financial crisis of the already loss making company has increased even more. Airlines have also not deposited TDS and GST since April 2025. In such a situation, there is an atmosphere of tension between the airline staff and the pilots.

Pilot and crew under stress
There is a lot of tension among many employees and their families due to staff reduction in SpiceJet. Due to this retrenchment, the jobs of cabin crew, ground staff and some officers may be in danger. The company has not yet clarified how many jobs are being lost, but there are indications from inside and around the company that the layoffs are taking place in several phases. So the pilots will be given work for 21 days and will have to take leave for 9 days.

The effects of the ongoing tension in the Middle East are being seen across the world. Its impact is not only on domestic gas or inflation but also on the aviation industry around the world. Meanwhile, the government has now given a sigh of relief to the domestic airlines. So that the rising cost of fuel and sudden increase in fares can be prevented.

Aviation Ministry’s decision
Actually, recently an important decision has been taken by the Aviation Ministry. Civil Aviation Minister Ram Mohan Naidu said that amidst the ongoing crisis in West Asia and the rapidly rising prices of ATF globally, a major decision has been taken to provide relief to Indian domestic airlines. The government has announced a 25 percent reduction in landing and parking charges for domestic flights for three months. With this decision, the operational pressure of airlines will reduce slightly. At the same time, the burden of increase in flight fare will be less on the travelers.

action should be taken with immediate effect
The Ministry has given strict instructions to the Airport Economic Regulatory Authority to implement this decision as soon as possible. At present, it should be started effectively at major airports. Let us tell you that earlier the government had passed on only 25 percent of the increase in ATF prices to the airlines, whereas globally ATF prices have increased by more than 100 percent.

Minister Ram Mohan Naidu said, ‘Under the leadership of Prime Minister Narendra Modi, our effort is to make air travel affordable and convenient for common passengers. Despite the current global challenges, we have ensured that there is not much burden on domestic airlines. Now by reducing landing and parking charges by 25 percent, we are giving further relief to the airlines, so that the air fares can remain stable.

Airlines will benefit
The ministry believes that with this relief, airlines are expected to save about Rs 400 crore at major airports in three months. The minister also said, ‘The ministry is in constant touch with all stakeholders, airlines, airport operators and AERA. Necessary steps will be taken further after reviewing the situation. The government says that these measures will maintain the viability of the domestic aviation sector and passengers will continue to benefit from safe and affordable air travel. The Ministry has clarified that keeping an eye on the changing circumstances, necessary relief measures will be taken in future also.