Tamil Nadu Chief Minister Vijay’s decision to reduce value-added tax (VAT) on aviation turbine fuel (ATF) has drawn rare appreciation from the Central government. Under the revised rates, ATF VAT in Chennai has been reduced from 29% to 16%, while regional airports will benefit from a significantly lower rate of 1%.The move is expected to ease operating costs for airlines, potentially improve regional air connectivity and encourage greater aviation activity across the state. Lower fuel taxes can also make smaller airports more attractive for airlines seeking to expand their services.The Centre’s positive response highlights the potential economic benefits of reducing aviation fuel taxation. The actual impact on airfares and flight operations, however, will depend on how airlines respond to the reduced costs.
