Jet fuel price may go down 25%

New Delhi: Indian carriers have found a lifeline to stay afloat by importing aviation turbine fuel (ATF) themselves for at least 25% lower rates than what they currently pay to oil PSU and state governments as oil charge and sales tax. The Federation of Indian Airlines—an umbrella organisation of Indian carriers —has applied to the Directorate General of Foreign Trade (DGFT) to import ATF as the government allows end users to import fuel for self use.
If allowed, airlines would be able to access cheaper fuel and also possibly lower the skyhigh fares.
Airlines will tie up with airport operators and oil companies to use the fuelling infrastructure at reasonable rates. The DGFT has sought an NOC from the oil ministry before giving the nod to FIA. Thanks to a mix of high price and even higher taxes, ATF prices in India are among the highest in the world and today fuel accounts for nearly half of airlines' total operating cost. Despite several rounds of talks with states, barely one or two of them had lowered sales tax. "Once airlines import ATF on their own, they will not have to pay high sales tax in range 20 to 24%. Only a custom duty of 5% will have to be paid for using fuel for own use and there'll be a minimum of 25% relief to total landed cost of ATF," added a senior aviation ministry official.
17/09/08 Times of India

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Categories: Indian Aviation- In General Sep 2008, New Sep 2008