New Delhi: Any proposal by Kingfisher Airlines Ltd seeking the direct import of aviation turbine fuel (ATF) will be considered on merit, said a top commerce ministry official.

By Bloomberg

Only state-run trading enterprises such as Indian Oil Corp. Ltd are currently allowed to import ATF. DGFT, which comes under the ministry of commerce and industry, has previously allowed import of regulated items, said the official, who spoke on condition of anonymity. “We have not received any request so far. If the proposal has merit, then it could also lead to a policy change. If we allow one airline, then others can also quote the decision to seek import of ATF."

Mallya unsuccessfully sought to import ATF in 2008. The Federation of Indian Airlines (FIA) lobby group sought a similar relaxation from DGFT, Mint reported on 16 September 2008. “Nothing has come to the platform of FIA" of late, FIA secretary general Anil Baijal said on Wednesday. “Quite some time back we suggested to the government to allow airlines to import it on their own. There was no response so perhaps it was not found acceptable."

Direct imports could lead to a saving of as much as 10% in operating costs, according to an FIA estimate. Fuel, which accounts for over 40% of an airline’s operating cost, is supplied by public sector oil companies such as Indian Oil and is taxed at 4% to 30% by states.

Even if direct imports are allowed, the issue of how flights will be refuelled will need to be resolved, said oil industry analysts. The airlines “don’t control the fuelling at the airports, which is done by government-owned oil marketing companies (OMCs)," said a Mumbai-based analyst at one of the big four audit firms requesting anonymity. “Getting a no-objection from them will be a tough task. Such a move may also be opposed by DGCA (regulator Directorate General of Civil Aviation), OMCs (oil marketing companies) and MoPNG (ministry of petroleum and natural gas)."

Private airline operators have asked the centre to bring ATF under the proposed goods and services tax to ensure that levies are uniform across the country.

Utpal Bhaskar contributed to this story.

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