Kingfisher Airlines said on Tuesday that it has applied to the Directorate General of Foreign Trade for direct import of jet fuel in order to reduce fuel costs drastically.
Addressing a press conference in Mumbai, the promoter of the airline Vijay Mallaya said his company has "applied officially to the ministry of commerce for direct import of fuel" but "that seems to be a last resort to get fuel costs down to where they should be."
"If we import fuel directly for our own use we become an actual user, and therefore, we don't pay sales tax," Mallya said.
The cost of jet fuel accounts for over 50% of the operating cost of an airline, which rises further due to sales tax charged by state governments.
The UB group chief said fuel prices had never been so high and were compounded by local sales taxes that give "windfall profits" to state governments.
"This is something that needs serious attention of our state governments and our central government. The industry needs this issue to be addressed immediately," he said.
Mallya said the airline has managed to reduce its dues to the three state-run Oil Marketing Companies (OMCs).
"We have fully repaid IOC ( Indian Oil Corporation) and BPCL (Bharat Petroleum Corporation Limited). As far as HPCL (Hindustan Petroleum Corporation Ltd) is concerned, from over Rs 600 crore of unsecured credit... we have given bank guarantees and our outstanding to them is down to Rs 40 crore."