Air India, Indigo Ticket Prices To Rise More? What Does Hike In Windfall Tax On ATF To Rs 42 Mean For Airlines

The government has hiked the export duty or windfall tax on aviation turbine fuel by 42.4% to Rs 42 per litre from the earlier Rs 29.5 per litre. This is expected to boost government revenue but is a big drawback for companies, which will likely pass the impact on to consumers. Simply put, the cost of your airline ticket could rise.

ATF Fuel Duty Hike:

As per the latest update, the Centre increased windfall tax on ATF to Rs 42 per litre, an upside of Rs 12.5 from the earlier duty of Rs 29 per litre.

Last month, the government reimposed a windfall tax of Rs 29 on ATF for refiners. That time analysts at Emkay Global pointed out that the windfall tax would lower refiners' middle distillate netback to $60-80 per barrel.

What Is Windfall Tax?

Windfall taxes are imposed on companies and industries during unprecedented times such as geopolitical crisis, pandemics, wars, or supply shortages. These are applied to companies who are expected to reap gains from external circumstances.

One of the examples is when the government imposed a windfall tax on July 1, 2022, after Russia invaded Ukraine, which led to a sharp surge in crude oil prices to $150 per barrel. Some oil and gas companies witnessed substantial profits from the external circumstances, which prompted the government to impose a windfall tax on these industries.

Hence, the main agenda of a windfall tax is to seize unanticipated gains of a business or sector to offer fair distribution of profits in society. Also, a windfall tax boosts the government's revenue book.

It needs to be noted that windfall tax is applied to addition of the standard tax rate.

As per Bajaj Finserv website explainer, windfall taxes are majorly disadvantageous to companies as they reduce profits. Heavy taxes could also curb innovation as companies may be forced to limit their investment in research and development efforts. Also, companies or industry may transfer the burden to consumers to sustain their profit margins, which will likely spike market costs for consumers.

Jet Fuel Prices Hike:

Due to the ongoing Middle East crisis, Indian airlines have taken a significant hit. Notably, for the April 2026, the oil marketing companies have more than doubled the price of jet fuel to a record high of over 2,07,341.22 lakh per kL from April 1 Rs 2.07 lakh per kiloliter.

For the first time ever, the price of aviation turbine fuel has crossed Rs 2 lakh mark. With approximately a 115% hike, the ATF is priced at Rs 2,07,341.22 lakh per kL in Delhi with effect from April 1, for non-scheduled carriers and charters. In the previous month, the price stood at Rs 96,638 per kL in the national capital.

The highest increase was done in Chennai with ATF costing at Rs 214,597.66/KL, registering a surge of Rs 114,317.17 from the previous month's price of Rs 100,280.49.

This pushed Indian airlines to hike airfares. Both Air India and Indigo have revised their fuel surcharge on domestic and international routes, which impacts airfares eventually.

Air India, Indigo, Akasa Air Hikes Fares:

Air India Flight Ticket Prices Hike:

The Tata Group-backed airline has revised its fuel surcharge model, under which, passengers who are travelling between 0 to 500 kilmetres distance will pay an additional Rs 299 per sector, while the fee is Rs 899 on longer routes than 2,000 kilometers.

The new fuel surcharge has come into effect from April 8th for domestic routes and from April 10th on international route.

Akasa Air Flight Ticket Prices Hike:

Following the similar trend, late-Rakesh Jhunjhunwala-backed Akasa Air also increased its fares. The airline has launched a surcharge from Rs 100 to Rs 1,300 on both domestic and international routes on new ticket bookings with effect from March 15.

Indigo Flight Ticket Prices Hike:

The largest airline of India in terms of market share, has imposed additional charges of up to Rs 950 per sector on domestic destinations and Rs 10,000 charge on long-haul international routes. The new rates have been implemented from April 2.

Last week, the government announced 25% cut on flights landing and parking charges at all major airports for Indian airlines, to give relief to their rising costs.

The 25% cut is effective immediately for all domestic flights. However, this development is applicable only for a period of 3 months.

Along the similar lines, the Airports Authority of India (AAI) is also directed to cut landing and parking charges at all its non-major airports by 25% of the approved rate. This reduction for all domestic flights will also remain applicable for a period of three months.