Debt-laden Kingfisher Airlines (KFA) and Air India (AI) have become the first domestic carriers to apply for permission to directly import aviation turbine fuel (ATF) or jet fuel.
Direct import of ATF is likely to bring down the operational costs of airlines by 10-15%.
Both carriers had filed applications with the Directorate General of Foreign Trade (DGFT), government sources told Hindustan Times.Till now airlines bought fuel from oil marketing companies. The Economic Survey tabled in the Parliament earlier this month had noted that airlines had been affected by high ATF prices because of high incidence of taxes and the decision to allow them to import ATF was likely to improve their operational economics.
The AI board on March 27 approved direct import of ATF and the airline would shortly appoint a service provider, who would source the supply as well as provide the necessary infrastructure for storage and distribution of the same for in-plane fuelling.
Indian carriers operate in an exceptionally high-cost environment. The single-largest element contributing to airline costs is ATF, which accounts for 40% of the operating cost of Indian carriers, against 20% for international carriers. ATF in India is priced, on an average, almost 60% higher than globally.