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Last Updated : May 08, 2019 12:28 PM IST | Source: CNBC-TV18

Delhi slashes jet fuel tax to 1% for regional connectivity

Analysts believe an overall 10-15 percent cuts in costs is likely for all take-offs from Delhi. This may be followed by similar news in Mumbai and Chennai.


In a major boost to the aviation industry, the Delhi government in its budget decided to cut jet fuel tax rate to a meagre 1 percent from the 25 percent. The move is aimed to boost the Centre's regional connectivity scheme.

Delhi Finance Minister Manish Sisodia said the tax cut on jet fuel or aviation fuel turbine (ATF) will be for all flights under the regional connectivity routes.

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"This is a remarkable reform that will also boost the tourism industry. Hope there is no fine print in this reform," said aviation expert Kapil Kaul of CAPA.

Analysts believe an overall 10-15 percent cuts in costs is likely for all take-offs from Delhi. This may be followed by similar news in Mumbai and Chennai.

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This news will also be a huge positive for the aviation stocks, namely Jet Airways, Interglobe Aviation and SpiceJet, which experts believe will rise by more than 10 percent in the near-future.

"Delhi has the maximum air traffic, and hence it will definitely affect the local operators. The aviation sector has been usually bludgeoned by bad news has come out of the blue with good news," said Sanjiv Bhasin of IIFL.

Around 60-66 percent of the entire traffic flow is between the metro cities, with Mumbai and Delhi being the highest, said Mayur Milak of Anand Rathi.

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First Published on May 5, 2019 07:30 am
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