In an apparent attempt to bring down its fuel bill, cash-strapped private air carrier, promoted by Vijay Mallya has started the process of importing aviation fuel, according to a Reuters report. By import fuel, Kingfisher intends to bring down its fuel bill, but present face enormous and expensive logistcial impediments.
Stating that increased fuel prices are just one of the issues hampering India's ailing airline industry, but a recent decision allowing direct import of jet fuel by airlines is not a pragmatic solution, as the large costs of establishing storage and supply infrastructure, the report went on to add that India had in February given approval to direct imports of aviation turbine fuel (ATF), a long-standing demand from airline firms forced to buy fuel more than 50 percent costlier than the global average, mostly due to local taxes.
"Kingfisher Airlines has received authorisation from the Director General of Foreign Trade for the import of aviation turbine fuel. What is more, we are taking active steps to initiate the process of ATF import," the company said in a statement. SpiceJet Ltd, another private operator, majority of stake, held by Kalanidhi Maran, said on Wednesday it had approval to begin direct ATF imports, which account for around half of Indian carriers' operating costs.
Debt-laden Kingfisher Airlines, which has cancelled its services as banks refused to extend loans. In fact, it has become a byword for the troubled industry which is expected to have lost up to $ 3 billion in the fiscal year that ended in March, quoting the Centre for Asia Pacific Aviation, the report said.
According to industry grapevine, direct imports could bring down fuel costs by 15 to 20 percent, but setting up the infrastructure to import, store and deliver the fuel to their aircraft would require large upfront costs, the cautioned. Oil and gas firm Reliance Industries said in as early as in February this year that it was in talks with a number of airlines to provide jet fuel infrastructure and transport services.
India's airlines were previously required to buy fuel from marketing companies including state run Indian Oil Corporation , Hindustan Petroleum Corp and Bharat Petroleum Corp, which are mandated to levy various federal and state taxes, the report added.
