A reduction in value-added tax on aviation turbine fuel (ATF) by Maharashtra and Delhi could offer a meaningful cost reprieve to Indian airlines, according to HSBC, which said the move affects airports accounting for roughly 37% of the country's domestic air traffic.
The brokerage estimates the tax cuts could lower fuel costs by Rs 1,200 crore to Rs 1,500 crore for InterGlobe Aviation, which operates the IndiGo brand. SpiceJet could save Rs 100 crore to Rs 200 crore, while Air India may see a reduction of Rs 800 crore to Rs 1,000 crore in its fuel bill. Akasa Air could benefit by Rs 200 crore to Rs 300 crore.
Maharashtra has cut VAT on ATF from 18% to 7%, while Delhi has lowered the levy from 25% to 7%. Together, airports in Mumbai, Nagpur and Delhi account for more than a third of India's domestic aviation fuel consumption.
HSBC said the lower tax rates could reduce IndiGo's FY27 fuel bill by roughly 4% to 5%, while SpiceJet's fuel costs could decline by around 3% to 5%. The actual benefit may be even larger if airlines are able to optimise refuelling patterns and take on more fuel at lower-tax airports.
19/05/2026 Yukta Baid/NDTV
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