Union Aviation Minister Praises Tamil Nadu CM Vijay As State Cuts ATF VAT To 16% At Chennai Airport

Chief Minister of Tamil Nadu, Mr. Vijay, has garnered attention from the Centre following his administration's reduction in value-added tax (VAT) on aviation turbine fuel (ATF) at Chennai airport. The state's decision to lower ATF VAT from 29% to 16%, while fixing it at 1% for other airports in Tamil Nadu, has been met with praise from the Civil Aviation Minister, Ram Mohan Naidu.

Naidu expressed gratitude to Mr. Vijay for this initiative, highlighting the importance of collaboration between the Centre and states in making air travel more affordable. He emphasized the need for cooperation to address the financial challenges faced by airlines, which have been exacerbated by rising operating costs due to higher crude oil prices, geopolitical tensions, and the weakening rupee.

The Federation of Indian Airlines had warned that higher jet fuel costs could force carriers to cut services on financially unviable routes, potentially leading to reduced flight frequencies and additional travel times. Lowering the VAT rate on ATF could help alleviate some of these pressures and potentially result in more affordable ticket prices, particularly on routes benefiting from significant tax savings.

Tamil Nadu's Industries Minister, Mr. Virudhai Magal Keerthana, emphasized that the tax reduction was aimed at improving aviation accessibility and strengthening regional airports. She believed that lower operating expenses could encourage airlines to introduce new routes, increase flight frequencies, and expand services beyond Chennai.

The government anticipated that the reduced VAT rate would contribute to better regional air connectivity, which would, in turn, support regional economic activity and attract further aviation investment.

While the reduced VAT rate on ATF is expected to benefit airlines and potentially lead to lower ticket prices, Naidu stressed that any reduction in airfares would ultimately depend on airlines passing on their fuel tax savings to passengers.