Chennai, Sep 13() : SpiceJet is the first Indian airlines to begin steps to import ATF (aviation turbine fuel).
Reliance Industries Ltd (RIL), would look after the quality control services of ATF at its coastal terminals. SpiceJet’s first import bought from an importer has been loaded into the tank in Kochi where RIL does the quality check. After this it will be loaded onto tankers taken to a storage tank at Kochi airport. SpiceJet would pay rent for the storage tank and transportation. Eventually it will get an import license to bring ATF on its own. This will cut fuel bill by 25% since it will save on sales tax.
A private player tanker in Kochi port is used to offload the ATF coming through ships. RIL does the checks and corrections and then it is stored in a common storage tank at the airport. The Government had permitted airlines to import directly to cut costs.
Presently, airlines are buying from State-owned oil companies who keep increasing prices as global crude prices increase and State Governments levy huge sales tax on the purchase.
Indigo is said to be in talks with the IOC to import ATF. ATF price rose by 7% with rupee fall and State levies VST at 25%. Direct import cuts off this value added tax. For all airlines the ATF accounts for 40% of the operating costs.
With Kingfisher grounded and other airlines operating fewer flights, the sales of ATF fell by 1.5% this year. Oil companies say that they are already giving Rs 6000 discount for one kilolitre.
Oil companies say that ATF sellers give no guarantee on quality and transporting it to terminals is a hazardous task. ATF orders have to be for six months and the volumes should be high as well as the sellers would operate only on cash and carry whereas State oil comapnies give credit. Oil companies have tanks that are at various locations across the country for easy access to airports.