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Rediff.com  » Business » Aviation ministry to press for airlines' direct import of fuel

Aviation ministry to press for airlines' direct import of fuel

June 09, 2014 10:42 IST

AircraftThe ministry of civil aviation is to recommend that oil marketing companies be asked to share their infrastructure with airlines, to facilitate direct import by the latter of aviation turbine fuel.

Such direct import was formally allowed in February 2012 but the aviation companies lack the infrastructure to do so.

A senior official at the ministry said, “We are looking at measures by means of which oil companies can share their infrastructure for transporting the fuel.

"This can be done at an agreed cost.”

Fuel costs are half the operational expenses of an airline in India.

The value added tax on ATF ranges from four per cent to 30 per cent, depending on the sales tax levied by a state.

If an airline can import fuel directly, it would only have to pay customs and countervailing duties, saving on state levies.

To address industry concerns over varied taxes at the state level, the civil aviation ministry is additionally looking at urging the government to levy a uniform tax on jet fuel.

Taxes on ATF in India are among the highest in the world and are considered a major reason for the mounting losses of airlines.

“We will ask that state taxes be rationalised and a uniform rate of four per cent levied on jet fuel.

"However, this requires consultation with states, which will have to do away with the revenues they get through sale of ATF,” added the ministry official.

Prime Minister Narendra Modi has asked all ministries for presentations outlining key issues which require urgent attention, to bring back growth in the economy.  

The presentations will be made in groups.

The civil aviation ministry is a part of the transport and communication group, which also has shipping, road transport and highways.

The other points in the presentation would include a focus on regional connectivity, development of cargo facilities at airports, rationalisation of taxes to support maintenance, repair and overhaul, plus development of low cost airports.

The ministry has in its 100-day agenda also identified as priority the clearance of the Bill for establishment of a Civil Aviation Authority and restoration of India to category-I status by the US aviation regulator, the Federal Aviation Administration.

FAA had in January this year downgraded India’s safety oversight mechanism to category-II status.

This barred Indian airlines from commencing additional flights to the US and from code-sharing with American counterparts.

The Directorate General of Civil Aviation is working towards recruiting and training 75 flight operations inspectors to address the FAA concerns.

Directorate General of Civil Aviation has 11 FOIs presently and another 13 are expected to join soon.

Sharmistha Mukherjee in New Delhi
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