Open access may not lead to reduced ATF rates

The end of the monopoly of oil PSUs on selling jet fuel at Delhi and Mumbai airports is expected to bring competition and more transparent pricing.

However, increased throughput as well as operation and maintenance charges after the airport developers add new facilities may cancel out these advantages.

ATF supply facilities at Mumbai and Delhi airports are owned and operated by oil PSUs while the land is owned by the developers.

The airport authorities levy land lease and throughput charges on oil PSUs. A large part of the throughput fee, besides operation and maintenance (O&M) charges, are included in the final fuel price.

In time, the airport developers will take over the supply infrastructure, set up more more hydrants and go for an open access system where both public and private firms can sell fuel. This will lead to higher charges on the suppliers. "We will give a break-up of the prices, including O&M and throughput charges, which will bring transparency to the system," said a Delhi airport official.

But with more infrastructure and hydrant facilities, O&M charges may be hiked. "Setting up new hydrants will mean huge costs, which will have to be recovered. So there will be an increase in maintenance charges as well," said an airport official.

While Mumbai International Airport Limited (MIAL) plans to add new facilities at the upcoming Sahar terminal, Delhi International Airport Limited (DIAL) has plans for around 55 such facilities by 2010.

"If there is an increase in O&M charges, they will be passed on to airlines," said an oil PSU official. Also, following the example of Kolkata and Chennai, both Delhi and Mumbai have decided to increase throughput charges, industry sources say.

"In spite of the fact that Mumbai is one of busiest destinations, out throughput charges are lower that some smaller cities like Baroda. There is a clear need for an increase and we are in talks with the oil companies for that," said a Mumbai airport official. Delhi airport officials denied that any such hike was in the offing.

Airports Authority of India (AAI), which is in charge of Kolkata and Chennai airports, recently decided to hike their throughput charges by 17 times (Kolkata) and 21 times (Chennai) by charging around Rs 1200/kl. Mumbai airport currently charges a throughput fee of Rs 58/kl.

"In spite of more competition and transparent pricing, these charges will be borne by the airlines, leading to a hike in ATF costs," said an airline executive.

The civil aviation ministry is, meanwhile, holding meetings with oil PSUs to persuade them to streamline prices. "Aviation Minister Praful Patel will request Petroleum Minister Murli Deora for a meeting with the CEOs of oil companies," said a ministry spokesperson.