Airlines could save Rs 2,500 cr on ATF import

Domestic airlines will save around Rs 2,500 crore annually if they import aviation turbine fuel (ATF) directly rather than buy it from state-owned oil marketing companies.
This would help them shave off around 14 per cent of their burgeoning fuel bill and cut the industry's projected loss of Rs 8,000 crore for the current financial year by a little less than a third.
Kingfisher Airlines Chairman Vijay Mallya has mooted the idea, saying that the carrier is going to tie up with the Mukesh Ambani-controlled Reliance Industries, which will import ATF and supply it to the company. This, he said, would help the company save over Rs 600 crore in a year.
Under government rules, if a domestic carrier imports fuel directly for its own captive usage, it does not have to pay sales tax. The only tax it needs to pay is a 5 per cent import duty.
The savings in tax are substantial. Sales tax on ATF varies from 20 per cent in Delhi to as high as 29 per cent in Chennai. Only a few states like Andhra Pradesh and Kerala have bought it down to 4 per cent.
According to private oil companies which are negotiating to import ATF on behalf of the airlines
said the key constraint in the whole process would be the lack of infrastructure.
"...import of ATF can only be done in the coastal markets like Mangalore, JNPT (near Mumbai) and Chennai. But for places like Delhi, the imported ATF has to be transported over land. The transportation charges would be such that these would negate the benefit earned on zero sales tax," said an industry expert.
04/07/08 Surajeet Das Gupta & Anirban Chowdhury/Business Standard

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Categories: Foreign Jul 2008, Indian Aviation- In General Jul 2008, New Jul 2008