Civil Aviation Sector – CA Policy 2016, UDAN, Open Skies, etc.

With petrol costlier than aviation fuel, it’s now cheaper to fly than ride a bike

  1. Higher state taxes coupled with greater incidence of central excise duties has resulted in petrol becoming more expensive per litre than aviation turbine fuel (ATF).
  2. All fuels are subject to several taxes, resulting in their final market price being significantly higher than the price dealers pay for the fuel.
  3. One major reason for the mismatch between the prices of ATF, a highly refined fuel and petrol is the higher burden of central excise duties on the latter.
  4. Another reason for ATF enjoying lower excise duties than petrol or diesel is that aviation fuel can be freely imported.
  5. Hence, if the Indian government hikes the excise duty on ATF, airlines can simply import it from cheaper sources.
  6. Consumers of diesel or petrol don’t have any such option.

There are also fiscal reasons behind the government’s persistent hikes in excise duty on petrol and diesel.

  1. Higher state taxes coupled with greater incidence of central excise duties has resulted in petrol becoming more expensive per litre than aviation turbine fuel (ATF).
  2. All fuels are subject to several taxes, resulting in their final market price being significantly higher than the price dealers pay for the fuel.
  3. One major reason for the mismatch between the prices of ATF, a highly refined fuel and petrol is the higher burden of central excise duties on the latter.
  4. Another reason for ATF enjoying lower excise duties than petrol or diesel is that aviation fuel can be freely imported.
  5. Hence, if the Indian government hikes the excise duty on ATF, airlines can simply import it from cheaper sources.
  6. Consumers of diesel or petrol don’t have any such option.
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