Indian airlines unlikely to face big hit from fuel tariff, data shows

Indian carriers are unlikely to face a significant hit from the government’s decision this week to impose a tariff on jet fuel, as imports account for less than 5% of domestic jet fuel consumption. Government data reviewed by Reuters showed India’s annual jet fuel consumption in the fiscal year ended March 31, 2018 was 7.6m tonnes, while imports in that period were just 291,000 tonnes. “Airlines import insignificant volumes,” said Kapil Kaul, CEO and director for South Asia at aviation consultancy CAPA. India said Wednesday it is raising import tariffs on 19 “non-essential items,” including aviation turbine fuel, marking a further tilt toward protectionism as it tries to reduce its widening current account deficit and tackle a sharp slide in the rupee. India’s move to impose a 5% tariff on imported fuel dented shares of domestic airlines on Thursday, sparking fears of further pressure on airlines already reeling under the pain of rising costs and a weakening rupee. “Any increase on the ATF will put additional burden on airlines. Furthermore, the depreciating Indian rupee is an additional cost burden on the Indian carriers,” IndiGo said. A finance ministry source said taxing imported fuel is unlikely to increase prices and only two Indian airlines currently import some jet fuel.<br/>