No infrastructure, airlines unable to import fuel.

KOCHI: Though almost a year has lapsed after the Centre decided to permit airlines to directly import aviation turbine fuel (ATF), none of the airlines has been successful in importing ATF so far.

The Centre had taken the decision after the cash-strapped airlines' clamour that ATF accounted for about 50% of their operational cost in the domestic sector.

They had claimed that direct import of ATF would bring down their operational cost by at least 20% to 22% as they can then avoid paying sales tax which hovered around that level.

Some states had raised concern that the decision would affect their revenue streams. Kerala was levying about 29% sales tax on ATF and had generated Rs 58 crore revenue last year. The finance department was estimating that this might shoot up to nearly Rs 69 crores in the current fiscal, considering the growing demand. There were fears that the decision to permit direct ATF import would derail these estimates.

However, the aviation companies had to go slow on the proposal when they realized that the costs involved in building up the storage and transport network for ATF might offset the gains from direct importing. The decision of the oil firm to not share their infrastructure also added to the challenge before the airlines.

"As far as we know, none of the airlines could import ATF so far,'' a spokesman for the Indian Oil Corporation (IOC) told TOI here.

Kingfisher was in the forefront of the campaign for direct import of ATF, but the subsequent developments made it impossible for the airline to pursue its demand.

Five airlines, Air India, Kingfisher, SpiceJet, Indigo and Go Airlines, had obtained permission from the Director General of Foreign Trade (DGFT) to import ATF.

"We are not pursuing the proposal now, as we don't have the infrastructure (tankers, pipelines for transportation, refuelling facility at airports) for import of ATF. We were hoping that we will be able to save 20% of operational cost in the domestic sector, if we import ATF directly. Now, we have to find some solution to the infrastructural constraints for ATF import.

We have not altogether abandoned the proposal, though,'' an Air India top official said.

The spokesperson for SpiceJet said the airline was still exploring the possibility of the importing some quantity of ATF.

"We are waiting for some more documents to be obtained from the government for importing ATF. We may not be able to meet the whole of all our ATF requirement through import. But We still

want some quantity so that we can have practical insight into infrastructure challenges of importing ATF,'' she said.

Indigo spokesperson said the airline officials don't want to share anything at this stage on their ATF import plans, while an official of Jet Airways said they had not even applied for ATF import recognizing its practical constraints.

Source : timesofindia.indiatimes.com