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India cuts aviation turbine fuel tax to 11%

The Indian government has reduced aviation turbine fuel (ATF) taxes by three percentage points to 11%, effective 11 October.

The announcement was made on 10 October, in a notification made by the ministry of finance's revenue department.

New Delhi explains the reduction in taxes "is necessary in the public interest to do so".

High fuel prices have been the bane of Indian airlines, with the recent quarterly results by three carriers showing large declines in its earnings.

IndiGo blamed higher fuel costs, adverse foreign exchange movements and the competitive fare environment for a 42% slump in earnings before interest, tax, depreciation and amortisation to $164 million for the quarter ended 30 June.

SpiceJet eked out an operating of profit of $3.8 million, down from $25 million a year earlier. While it enjoyed stronger revenue, this was offset by higher fuel costs.

Jet Airways posted a loss before tax of Rs13.2 billion ($198 million) for the quarter ended 30 June, reversing its profit before tax of Rs53.5 million from the previous corresponding period.

The move will be is expected to be welcomed by the industry, which has long lobbied for reduced taxes on ATF.

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