Govt permits 3 airlines to directly import 12.65 lakh kl ATF | india | Hindustan Times
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Govt permits 3 airlines to directly import 12.65 lakh kl ATF

india Updated: Apr 22, 2012 11:20 IST
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Three Indian carriers, which have been permitted to directly buy jet fuel from foreign sources, would together import almost 13 lakh kilo litres (kl) of the fuel at a cost of about Rs 5,780 crore for the present.

The carriers which have recently received permission from the Directorate General of Foreign Trade (DGFT) under the Commerce Ministry, to import aviation turbine fuel (ATF) are Kingfisher Airlines, SpiceJet and IndiGo.

Air India, which has also applied for such an approval, is yet to receive permission to import ATF. The move will help the airlines to significantly slash its operating costs.

"All the three airlines have been permitted to directly import ATF," a senior Commerce Ministry official told PTI.

While InterGlobe, owner of no-frill airline IndiGo, got approval to import 7.15 lakh kl worth Rs 3,200 crore of jet fuel, cash-strapped Kingfisher has been allowed to buy five lakh kl worth Rs 2,233 crore. SpiceJet would import only 50,000 kl worth Rs 235 crore, the official said.

The three carriers have been negotiating with leading oil marketing companies and were hopeful of beginning fuel imports in due course, a source said.

Industry experts have claimed that a mix of taxes levied by state-run oil marketing companies and the state governments make jet fuel prices in India among the highest in the world.

Currently, fuel costs account for about 40% of an airline's total operating costs.

SpiceJet's chief executive Neil Mills had recently said the airline industry would benefit from direct ATF imports due to high ATF prices in New Delhi.

"Aircraft fuel expenses were 90% higher than the same period last year and fuel cost as a proportion constituted 50% of the total revenue in October-December, 2011 quarter as compared to 37% in the comparable quarter for the fiscal 2011," SpiceJet had said in its Q3 financial statement.

The cash-strapped Kingfisher Airlines, which was burdened by a debt of over Rs 7,000 crore, had earlier strongly pitched for permission to allow foreign airlines to invest in domestic carriers.

India's civil aviation sector grew at an average of over 18% in the last seven years and the government has taken various steps to resolve the woes faced by airline industry, including allowing them to directly import jet fuel.