After slashing VAT on jet fuel, Tamil Nadu government asks airlines to add more services from Chennai airport

In a bid to boost connectivity, the Tamil Nadu government has reached out to various airlines to increase the number of flights and serve more destinations, both domestic and abroad from Chennai airport.

In recent times, quite a few meetings were held between the Tamil Nadu government, Airports Authority of India (AAI) and the airlines, and whenever the government had asked them to add more flights and expand connectivity, one of the primary demands of the airlines was that Value Added Tax (VAT) on aviation turbine fuel (ATF) be decreased.

As jet fuel accounts for a considerable portion of an airline’s operating cost, the airlines, AAI, and the Ministry of Civil Aviation too had been pushing for reduction in VAT for a while.

Sources said that the airlines were happy after the government announced the steep cut in VAT on ATF at Chennai airport from 29 per cent to 16 per cent, and have assured the government of expanding services from Chennai airport. “We have been constantly persuading them to connect more destinations. Now that VAT has been slashed, the airline representatives have agreed to add more flights. We hope to see a difference soon,” a source said. The government has requested one of the airlines for a direct flight to Japan from Chennai.

One of the largest airline operators at Chennai airport has promised to increase the number of flights by nearly 25 per cent and another prominent operator by eight per cent, another source said. “But they have not promised a time-frame. There may not be an immediate impact in terms of increasing the number of flights at Chennai. We have to wait and see if there is an increase in the summer schedule,” the source added. They said the State government must also work more aggressively to create the demand by generating thousands of high-value jobs. IndiGo, Air India, and Akasa Air welcomed the cut in VAT.