Tamil Nadu Chief Minister Vijay has received praise from Union Civil Aviation Minister Ram Mohan Naidu after his government reduced value-added tax (VAT) on aviation turbine fuel (ATF), offering relief to airlines facing rising operating costs. The tax rate has been reduced from 29% to 16% at Chennai airport and to 1% at other airports across the state. Naidu welcomed the decision, stressing the importance of cooperation between the Centre and states to make air travel more affordable.

The tax reduction comes amid rising aviation fuel prices, which have significantly increased airline operating expenses. ATF accounts for a substantial share of airline costs, while a weakening rupee and longer flight routes due to airspace restrictions have added further pressure on Indian carriers. The move is expected to ease some of these financial challenges.

Tamil Nadu Industries Minister Virudhai Magal Keerthana described the decision as a significant step towards making air travel more accessible and strengthening regional aviation connectivity. She said lower operating costs could encourage airlines to introduce new routes, increase flight frequencies and expand services beyond Chennai, helping connect more regions and support economic growth.

According to government notifications, the revised VAT rates will remain in force until October 31, 2027. A separate concession will reduce VAT on aviation fuel for smaller aircraft with a maximum take-off mass below 40,000 kg at airports outside Chennai from 5% to 1%. However, it remains to be seen whether airlines will pass on the savings to passengers through lower airfares.

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