Notwithstanding the strong objection raised by the oil marketing companies (OMCs) to the proposal for allowing private aircraft carriers, particularly beleaguered Kingfisher Airlines, to independently import Aviation Turbine Fuel (ATF), the Petroleum Ministry has conveyed to the Commerce Ministry that it had no objection if such a decision is taken by the Directorate General of Foreign Trade (DGFT).
“We have informed the Commerce Ministry that we have no issues if any private airline or the entire aviation sector wants to import ATF independently. However, they will have to negotiate on commercial terms with the OMCs for use of the infrastructure at the airports to dispense the fuel. We are all for import of ATF by any airline,” a senior Petroleum Ministry official said here. This could thrown open the decks for allowing import of ATF by private airlines.
The DGFT had recently indicated that it was very positive on taking a decision on allowing import of ATF by Kingfisher Airlines and had asserted that a decision in this context would be taken very soon. However, the OMCs opposed the move asserting that it was bad economics for the cash strapped airline in view of high taxes and handling cost.
They had pointed out that India was surplus in AFT and exports half of its production annually. Allowing direct import of ATF may lead to avoidable simultaneous import/export of ATF and undue burden on port infrastructure in the country, they had stated. On the other hand, Kingfisher is of the opinion that by importing ATF directly, it can make substantial savings by not having to pay sales tax (which varies between 4 to 30 per cent from state to state). However, OMCs said the airline would have to pay 12.83 per cent duty on the imported ATF (additional customs duty or CVD of 8.24 per cent plus a 3 per cent education cess on top of it and an additional 4 per cent special CVD or SAD). Against this, Kingfisher presently pays only 8.24 per cent excise duty on jet fuel purchases made from oil firms.
The public sector companies also made it that they do not have surplus infrastructure facility at any port location in India, which can be hired by Kingfisher to import ATF. ``The airlines would either have to build its own storage tanks or hire those from oil companies for stocking the imported ATF at the ports. It would then have to make arrangements for transporting ATF to airports in trucks,’’ a senior official remarked.
Officials said Kingfisher can dispense the fuel into its aircraft at only three airports - Delhi, Hyderabad and Bangalore — which allow refuelling infrastructure to be shared on ‘Open Access’ basis. In rest of the airports, OMCs had the monopoly and the airline would need to negotiate and enter into specific agreements with these companies for extending their facilities.
Kingfisher Airlines chairman, Vijay Mallya had recently met DGFT, Anup K. Pujari to push for an early decision to import ATF.
Source : thehindu.com