ATF Tax Update: A very good news has come out for the Indian aviation sector. Indian Airlines have got a big relief after Delhi and Maharashtra governments reduced the tax on aviation fuel (ATF) to 7%. According to financial institution HSBC, this decision will lead to huge savings of up to ₹ 1,500 crore for airline companies. Along with this, the Maharashtra government has directly reduced the VAT on aviation fuel from 18% to 7%. This decision is very significant because airports like Delhi, Mumbai and Nagpur handle about 37% of the total domestic air traffic of the country.

Airlines will get big benefits

The country’s largest airline, IndiGo (InterGlobe Aviation) is going to get the biggest benefit of this tax cut. According to HSBC estimates, IndiGo can make direct savings of ₹ 1,200 crore to ₹ 1,500 crore in its fuel bill. Similarly, Air India will also get a huge relief of around ₹800 crore to ₹1,000 crore. Apart from this, Akasa Air with new fleet may save ₹200 crore to ₹300 crore and SpiceJet which is facing financial crisis may save ₹100 crore to ₹200 crore.

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Share Rating and Market Outlook

HSBC has maintained its ‘Buy’ rating on IndiGo shares and has set its target price at ₹5,210, which represents an upside of about 21% from its current price. On the other hand, considering the internal financial condition of SpiceJet, it has been given a ‘Reduce’ rating and its target price has been kept at ₹5.30. Market analysts are now waiting for IndiGo’s upcoming fourth quarter results and the ‘Analyst Day’ to be held in June, where the company will unveil its future plans.

Amidst its good news, HSBC has warned that even though the governments have reduced the taxes, but if the prices of crude oil increase in the international market or the Indian Rupee weakens against the dollar, then this relief may be less. For example, if jet fuel prices increase by even just 5% globally, IndiGo’s operating profit (EBITDA) could fall by 11.1%. Similarly, a fall of just Re 1 in the rupee against the dollar can give a blow of about ₹ 450 crore to IndiGo.

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US Iran Tensions: Amidst the increasing geopolitical tension in Iran, private aviation company Indigo has taken a major decision as a precautionary measure. The company informed on Sunday that in view of the current situation, it has canceled its flight services to Tbilisi (Georgia) and Almaty (Kazakhstan). According to Indigo, on January 25, all scheduled flights going from Delhi to Tbilisi and Mumbai to Almaty and returning from there have been cancelled. This decision has been taken keeping the safety of passengers and crew as priority.

impact of iran tension

In a statement issued on social media platform ‘X’, IndiGo said that it is continuously monitoring the recent developments in Iran and its surrounding areas. Due to security reasons, the company has made temporary changes in its flight timetable. Under this, on January 26, some flights coming to and from Tbilisi, Almaty, Baku (Azerbaijan) and Tashkent (Uzbekistan) can stop for a short time in Doha (Qatar) for refueling.

The airline also clarified that this step is purely precautionary and the services will be reviewed once the situation becomes normal. Passengers have been advised to check the flight status before their journey and keep an eye on IndiGo’s official website or social media handles for any updates.

Fear of turning into military conflict

It is noteworthy that the tension between Iran and America is continuously increasing and it is feared that this situation may turn into a major military conflict. Due to this geopolitical uncertainty, international airlines are making changes in their routes and operations, so that there is no compromise on the safety of passengers.

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India’s civil aviation sector is once again moving towards change. The central government has given No Objection Certificate (NOC) to two new airlines — Al Hind Air and flyexpress — while UP-based Shankha Air is set to start flights from 2026. This step has come at a time when only 9 Scheduled Domestic Airlines are active in the country and the number further decreased due to stoppage of flights by fly big in October. Currently, IndiGo and Air India Group together control more than 90% of the domestic market, with IndiGo alone having a market share of more than 65%. Recent operational issues have shown the risks of over-dependence. The government is promoting new airlines. Small towns are connected to the UDAN scheme. Despite the challenges, the entry of new airlines is a positive signal for the aviation sector.