New Delhi: As the state-run refiners increased Aviation Turbine Fuel (ATF) prices, experts believe that this would now adversely impact the June quarter results of Indian airlines. They said that this is the time when the government has to help the industry, one can not just raise the taxes to reduce the impact.
The ATF prices have increased by 40 per cent from January last year, from around Rs 50,000 per kilolitre to around Rs 70,000 per kilolitre. In the national capital, the ATF prices for domestic airlines increased by 2.44 per cent from Rs 68,857.97 on July 16. On 1 July, the ATF price in New Delhi, Mumbai, Chennai and Kolkata stood at Rs 68,262, Rs 66,482.90, Rs 70,011.44 and Rs 72,295.24 per kilolitre, respectively.
Aviation experts believe that this move is expected to make air travel more expensive even as passenger demand improves slowly amid the coronavirus pandemic.
Speaking to ETV Bharat, Sanat Kaul, Chairman of International Foundation for Aviation Aerospace and Drones, said, "It is very unfortunate and the government should take steps to stabilise the rising ATF prices. Government makes no money when the prices go up. Both the international and government taxes are also going up because they are based on a certain percentage. There is a serious issue for government to look into it."
Sanat Kaul said this is the time when the government has to help the industry, one can not just raise the taxes to reduce the impact. It is right that it's a financial issue, nobody can stop the oil prices from going up and going down but one has to manage the oil prices within the ambit of international prices.
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There is no thinking on the government side, the rise in Aviation Turbine Fuel prices is impacting the passengers and airlines due to the increase in fare prices and this will definitely impact the airlines upcoming quarter results, he added.
A report by Morgan Stanley on InterGlobe Aviation Ltd believes that IndiGo would report a weak Q1FY22 (April-June 2021 period) with losses at Rs 28.9 billion (Rs 2,890 crore) as the second wave in India and high fuel prices have hit earnings.
"We built in weak traffic in April-September 2021 and high fuel prices, which may take our earnings forecasts down sharply in FY22," it added.
IndiGo spent Rs 1,914.46 crore on jet fuel during the quarter despite operating at a lower capacity than the previous year because of the coronavirus pandemic.
Notably, as per the report tabled in Parliament on Friday, the Civil Aviation Ministry had asked the Finance Ministry to bring ATF under the ambit of GST at an applicable rate not higher than 12% with full input tax credit.
