State-owned oil marketing companies (OMCs), such as Indian Oil, Bharat Petroleum and Hindustan Petroleum, which enjoy monopoly in the aviation turbine fuel market, are reluctant to share infrastructure with airline companies for importing the fuel.
It has been over eight months that the government allowed domestic carriers to directly import fuel. But so far this has not progressed. Though, the private airlines have met the OMCs several times in the past few months to share their infrastructure for the ATF import, according to sources, no progress has been achieved through these talks.
?We are also not in a position to share infrastructure with them. We can think about it if they (airlines) agree to pay certain fee on such a service, however, none of them have shown interest in paying a fee,? an oil company official said on condition of anonymity. ATF accounts for more than 40% of their operational cost. In India, the prices are higher than the global prices mainly because of state taxes. It was only after intense lobbying by private airlines, the government in February this year allowed all domestic carriers to directly import fuel. However, the approval serves no purpose unless the the airlines either built their own infrastructure required for fuel handling or get into an agreement with the oil companies to import it for them.
An oil company official said that another reason why the oil firms are not too keen to import ATF on behalf of airlines is also because in the long-run it will affect the sales of other products such as petrol and diesel.
The Directorate General of Foreign Trade (DGFT) under the Commerce Ministry has already permitted Kingfisher Airlines, SpiceJet and IndiGo to directly import the jet fuel.
According to airline industry sources, IndiGo has got approval to import 7.15 lakh kl of jet fuel, Kingfisher has been allowed to import five lakh kl and SpiceJet would import 50,000 kl jet fuel. ?We do not know by when we would start importing ATF because we are yet to finalise a deal on infrastructure sharing. We are also in talks with private oil companies and are hopeful that something would work out soon,? a private airline official, who did not want to be named, said. ATF prices in Delhi are hovering at R68398.79 per kl, while in Kolkata and Mumbai, the prices are R75,490.91and R68,731.05 per kl respectively. It was anticipated that the direct import of ATF would lead to atleast 10% savings in the fuel cost of the airlines. However, with the fluctuation in the global fuel prices, the airlines expect that the savings may not be more than 5%. ?It also depends on the kind of charges and all that we might have to pay to companies for their infrastructure,? said the airline official.
