Kingfisher in talks with oil cos for ATF transportation

Kingfisher in talks with oil cos for ATF transportation

New Delhi: Vijay Mallya-led Kingfisher Airlines is in talks with state-run oil marketing companies for transportation of aviation turbine fuel, which it intends to import, from ports to various airports.

Besides, the UB Group Chairman is also seeking government’s approval for direct purchase of the fuel from global oil majors.

The airline plans to buy the jet fuel directly from global oil companies and take delivery of the product at one of the key ports in the country.

In a letter to Petroleum Minister Murli Deora seeking permission to buy jet fuel directly from the international market, Mallya said: “We are also speaking to Indian oil companies to store and transport the product on our behalf from these ports to various airports where we routinely consume the product."

These companies have also agreed to Into-plane service at the airports, he added.

Explaining the demand for allowing direct import of ATF, he said the Indian aviation industry is reporting significant losses largely due to the steep hike in oil prices and high tax imposed on the fuel by the various state governments.

“In this regard, we are actively exploring the possibility of directly importing ATF, which will obviate the need to pay any sales tax," Mallya said in the letter.

Mallya said Kingfisher had submitted the proposal of importing the fuel to the Director General of Foreign Trade. The proposal was referred to the Petroleum Ministry.

“We seek your support for this proposal and request you to appropriately recommend to the Director General of Foreign Trade," he said.

Mallya said importing ATF would help states in reviewing their position and ultimately rationalising the tax structure.

“I believe that this (the move) will help immensely the state governments reviewing their position and ultimately rationalising the taxation structure on ATF." he said.

This will not only help the aviation industry in the country but equally benefit the petro-industry as a reduction in landed prices of ATF will only help increase the demand for the product, he added.

The Federation of Indian Airlines had recently approached the DGFT for a no-objection certificate for airlines to directly import jet fuel.

Currently, ATF in India costs about 60% more than global prices, due to imposition of tax at various levels. Jet fuel is subject to import duty as well as sales tax by states, which ranges between 4% and 35%.

ATF accounts for about 50% of the cost of operations for airlines in the country.