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Our Bureau

New Delhi, Sept 16 In a move that will allow airlines to get aviation turbine fuel (ATF) at lower prices, the Federation of Indian Airlines has approached the Directorate-General of Foreign Trade (DGFT) to import fuel for domestic airlines, a senior Government official has said.

“The Federation has approached the DGFT for a no objection certificate to import aviation fuel. Technically speaking, there should be no problem as the import is being done directly for the end users (the airlines).

“The move could result in airlines getting fuel at 25 per cent lesser costs than what they are paying at the moment as no sales tax will have to be paid on the import. Even after the 5 per cent import duty is paid the price of the fuel will be lower than what is charged at the moment,” said a senior Government official who did not want to be identified.

FIA is an apex industry body, which has been formed by the scheduled carriers in India. The idea being mooted is to import the required amount of ATF for dispensing at some key airports from which airlines operate a majority of their flights.

Currently, aviation fuel accounts for 45-50 per cent of the operating cost of airlines. The idea of directly importing aviation fuel is being mooted as ATF rates for domestic operations are priced 70-90 per cent higher than what international airlines pay for picking up fuel in neighbouring countries including Dubai and Singapore. The high fuel cost is one of the primary reasons for the industry collectively reporting a loss in excess of Rs 4,000 crore during the year.

Senior officials of the Ministry of Civil Aviation, however, admit that the implementation of the proposal will not be easy. “There is bound to be opposition from the States and oil companies. The idea is to test the waters and pressurise the stakeholders to take some steps to reduce the high price that domestic airlines have to pay for ATF,” said a senior official of the Ministry of Civil Aviation.

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