**Executive Summary**
This document is a response to Unstarred Question No. 979 in Lok Sabha regarding the rationalization of Aviation Turbine Fuel (ATF), mechanisms in place to control prices, and the Ministry of Civil Aviation's actions to address various issues in the aviation sector. The response covers the impact of ATF on airline costs, efforts to rationalize VAT on ATF, measures to prevent excessive price surges, improvements in passenger grievance redressal, and steps to prevent monopolies. The date for the answer was February 5th, 2026.
**Key Points / Main Content**
* **Aviation Turbine Fuel (ATF) and Costs**
* ATF constitutes approximately 40-50% of the total operating expenses of an airline.
* VAT levied on ATF by State/UT Governments affects ATF prices.
* The issue of high VAT on ATF has been taken up with the States/UTs by the Ministry, with 6 States/UTs still charging VAT at 18% or more.
* **Airfare Regulation and Monitoring**
* Airfares are not regulated by the Government; airlines determine fares based on operational needs, adhering to Aircraft Rules, 1937.
* The Government generally refrains from regulating airfares to maintain market competitiveness but intervenes in exceptional circumstances with measures like capacity redistribution and temporary fare caps.
* The Directorate General of Civil Aviation (DGCA) has established a Tariff Monitoring Unit (TMU) to monitor airfares on selected 78 routes, covering about 27% of domestic traffic, to ensure airlines do not charge outside their declared tariffs.
* **Passenger Grievance Redressal**
* The Ministry of Civil Aviation (MoCA) has established a 24x7 Passenger Assistance Control Room (PACR) to improve passenger-centric governance.
* PACR integrates MoCA, DGCA, AAI, and airlines for real-time monitoring of flight disruptions, baggage issues, and refunds.
* Passengers can lodge grievances on the Air Sewa Portal for timely redressal.
* **New Airline Entry and Capacity Diversification**
* There are no regulatory entry barriers for new airlines.
* The Ministry has given NOC to 07 airlines in the last two years.
* Capacity diversification is encouraged through rationalization of traffic rights, airport infrastructure expansion, facilitation of fleet induction, and the UDAN Scheme.
* **Transparency and Digital Platforms**
* MoCA has implemented the e-Sahaj (Single Window Digital Platform) for online processing of civil aviation related approvals, including NOCs.
* DGCA processes applications for AOC through its online e-GCA / digital certification systems.
**Impact Analysis**
**Stakeholder: Airlines**
* **Impact:** Affected by ATF prices, VAT on ATF, airfare monitoring, and regulations.
* **Action Required:** Adhere to airfare regulations, engage with MoCA regarding VAT issues, and participate in efforts for capacity diversification.
**Stakeholder: Passengers**
* **Impact:** Affected by airfare pricing, passenger grievance redressal mechanisms, and overall travel experience.
* **Action Required:** Utilize Air Sewa Portal for grievance redressal.
**Stakeholder: State/UT Governments**
* **Impact:** Involved in discussions regarding VAT on ATF.
* **Action Required:** Review and rationalize VAT rates on ATF based on discussions with MoCA.
**Stakeholder: DGCA**
* **Impact:** Responsible for monitoring airfares, processing applications for AOC through its online e-GCA / digital certification systems, and implementing the TMU.
* **Action Required:** Continue monitoring airfares through the TMU and ensuring transparency and efficiency in regulatory processes.
**Stakeholder: Ministry of Civil Aviation (MoCA)**
* **Impact:** Oversees all aspects of civil aviation.
* **Action Required:** Continue to take up the issue of high VAT on ATF with States/UTs and continue to oversee efforts for capacity diversification.
Key Entities Referenced
Aviation Turbine Fuel (ATF): A key input cost for airlines, subject to taxation and price fluctuations, influencing ticket prices.
Ministry of Civil Aviation (MoCA): The primary ministry responsible for addressing issues related to airfares, taxation of ATF, passenger grievances, and airline licensing.
Directorate General of Civil Aviation (DGCA): Regulator that monitors airfares through the Tariff Monitoring Unit (TMU) and processes applications for Air Operator Certificate (AOC) through e-GCA.
Aircraft Rules, 1937: Referenced in the context of airfare regulation and airline flexibility.
UDAN Scheme: A scheme to broaden regional air connectivity.
GOVERNMENT OF INDIA
MINISTRY OF CIVIL AVIATION
LOK SABHA
UNSTARRED QUESTION NO. : 979
( TO BE ANSWERED ON THE 5th February 2026 )
RATIONALISATION OF AVIATION TURBINE FUEL
979. SHRI TAPIR GAO
SMT D K ARUNA
SHRI DAMODAR AGRAWAL
SHRI KALI CHARAN SINGH
DR. K SUDHAKAR
SHRI YOGENDER CHANDOLIA
SHRI ASHOK KUMAR RAWAT
SHRI BHARTRUHARI MAHTAB
SHRI MANISH JAISWAL
SHRI YADUVEER WADIYAR
SHRI PRAVEEN PATEL
SHRI DINESHBHAI MAKWANA
SHRI CHANDRA PRAKASH JOSHI
Will the Minister of CIVIL AVIATION
be pleased to state:-
(a) the manner in which Aviation Turbine Fuel (ATF) price movements have
influenced ticket pricing and airline cost structures;
(b) whether discussions have been held with the State Governments to rationalise
ATF taxation and if so, the details thereof;
(c) the safeguards in place to prevent excessive surge in pricing during peak travel
periods;
(d) the improvements made to passenger grievance redressal and refund
enforcement mechanisms;
(e) the steps taken by the Government to prevent aviation monopoly by certain
airlines in the country; and
(f) the details of new airline licenses pending before the Ministry of Civil Aviation
including the steps taken to expedite the same?
ANSWER
Minister of State in the Ministry of CIVIL AVIATION (Shri Murlidhar Mohol)
(a) & (b): Aviation Turbine Fuel (ATF) constitutes approx. 40-50% of the total
operating expenses of an airline. Levying of VAT by the State/UT Government on
ATF also affects its prices. The issue of high VAT on ATF has been taken up with
the States/ UTs by this Ministry on regular basis. 06 States/UTs are still charging
VAT, 18% or more.(c): Airfares are not subject to regulation by the Government and airlines have the
flexibility to determine their airfares based on their operational needs, while
adhering to Rule 135 of the Aircraft Rules, 1937. The Government generally refrains
from regulating airfares to maintain market competitiveness, however, it remains
vigilant and intervenes in exceptional circumstances by adopting measures like
redistributing capacity across various sectors and imposing temporary fare caps,
such as during Pandemic, Maha kumb, Pahalgam incident & recently massive
Indigo flight disruptions.
In order to enhance the transparency in airfare, Directorate General of Civil Aviation
(DGCA) has set-up Tariff Monitoring Unit (TMU) that monitors airfares on selected
78 routes on a random basis by using airlines websites on monthly basis to ensure
that the airlines do not charge airfares outside the range declared by them. This
covers about 27% of the domestic traffic. By doing so, the TMU plays a critical role
in maintaining airfare levels within the boundaries of the airlines' prescribed tariffs.
(d): Ministry of Civil Aviation (MoCA) has established a 24x7 Passenger Assistance
Control Room (PACR) to enhance passenger-centric governance. This initiative
integrates MoCA, DGCA, AAI, and airlines for real-time monitoring of flight
disruptions, baggage issues, and refunds, aiming to accelerate grievance redressal
and improve the overall travel experience. Further, passenger can lodge their
grievances on Air Sewa Portal for timely redressal.
(e) & (f): There are no regulatory entry barriers for new airline entrants, and any
company desirous of starting an airline can approach the Government with their
proposed business plan for obtaining initial NOC. In last two years, the Ministry has
given NOC to 07 airlines.
Further, capacity diversification is being encouraged through rationalisation of
traffic rights, expansion of airport infrastructure, facilitation of fleet induction by
multiple carriers, and broadening of regional air connectivity under the UDAN
Scheme, which enables several airlines to operate on underserved and unserved
routes.
MoCA has implemented the e-Sahaj (Single Window Digital Platform) for online
processing of civil aviation related approvals, including issuance of NOCs, to ensure
transparency and time-bound clearances and DGCA processes applications for AOC
through its online e-GCA / digital certification systems, enabling electronic
submission, tracking and monitoring of applications.
******