Kingfisher Airlines has secured permission from the Directorate General of Foreign Trade (DGFT) to import aviation turbine fuel (ATF) directly. The UB group airline, which is struggling to raise funds and has curtailed its operations to 100-120 flights each day, was the first to demand direct import of ATF last November.
Yesterday, SpiceJet secured clearance for ATF import. Air India, too, has sought DGFT permission for the same.
Kingfisher Airlines has received authorisation from the Directorate General of Foreign Trade for the import of aviation turbine fuel on April 11, 2012 and we are taking active steps to initiate the process of ATF import,” the airline said in a statement. Kingfisher is in talks with Reliance Industries Limited (RIL) to use infrastructure for storage and transport of fuel. RIL is likely to import jet fuel for SpiceJet. RIL is the only private oil marketing company that has infrastructure in 20 airports across the country.
Kingfisher purchases bulk of its fuel from Hindustan Petroleum Corporation Limited, one of three state-run oil marketing companies. In the third quarter of 2012, the airline spent Rs 738 crore on fuel but its fuel bill has reduced further with the airline drastically reducing flights and pulling out of international routes altogether.
At 24 per cent, the average tax on jet fuel in India is the world’s second highest after Bangladesh, where it is at 27 per cent. By importing it directly for consumption, airlines can save up to Rs 13,000 on every tonne of ATF at current prices, or Rs 2,500 crore a year.
High crude prices are one of the reasons for the losses made by Indian carriers. Fuel costs for Indian carriers constitute 50 per cent of the total operating cost, which has increased from 40 per cent in the past six months.