Domestic private airlines' attempts to save cost are likely to run into roadblocks with state-run oil marketing companies (OMCs) unwilling to share their massive infrastructure facilities to facilitate aviation turbine fuel import, for which the Group of Ministers has given its nod on Tuesday.
Following lobbying by cash-strapped Kingfisher airlines, the GoM had allowed private airlines to import ATF on their own. In fact, Kingfisher is learnt to have opened up channels for imports with Reliance Industries to use its infrastructure and logistics support from the landing point till delivery.
The Petroleum and Natural Gas Ministry had not given any undertaking on the use of infrastructure and logistic facilities of OMCs. Officials said it would be virtually impossible for the airlines to import ATF as the cost of transporting the fuel and developing the required infrastructure at airports is mind boggling.
ATF accounts for almost 40 per cent of the operating costs of an airline and another 30 per cent is contributed by high sales tax. The government has estimated that domestic airlines are likely to end the fiscal with a $20 billion debt burden and losses of around $2 billion.
A senior OMC official said, “We have built the entire set up in the last 4-5 decades. We cannot allow the airlines to use our facilities without paying for them. The government has not given us any instructions to come to the aid or share our facilities with the airlines.''
The private airlines will also face issues such as storage facility, transportation economics and distribution of imported ATF further across the country. Similarly, they will not have the leverage of not paying on time for the fuel consumed by them, as has been the case with OMCs.
