SpiceJet first to sign ATF import deal; delivery in July

Low-cost carrier SpiceJet today said it would become the first airline in India to import jet fuel directly, and expects to take delivery of the first shipment of aviation turbine fuel (ATF) in early July.

SpiceJet chief executive officer Neil Mills announced this at a conference call today after announcing its earnings.

The government had, in early February, announced a policy decision allowing airlines to import fuel directly in order to save operating costs, as ATF sourced from India was far more expensive than imported ATF due to high taxation.

On 18 April, the Directorate General of Foreign Trade, the nodal decision-making body on imports and exports, had allowed SpiceJet to import aviation fuel directly, making it the first airline to get such an approval.

Mills said the airline hopes to save considerably in fuel costs with direct fuel import. While SpiceJet saw its fuel bills shooting up 55 per cent in the last quarter of the past fiscal, for the full fiscal of 2012, it was still higher at 64 per cent.

Mills refused to divulge details on the supplier, logistics and storage facilities citing confidentiality with the partner, but said they have tied up with a private company.

While refusing to give guidance for the first quarter of the current fiscal, Mills said he was "hopeful of a strong recovery this quarter" as there has been a steep fall in crude prices, from $116 barrel in the first quarter of 2012 to $107 a barrel for Brent crude now.

"Coupled with fall in crude prices, direct import of ATF will help us save big time in fuel cost," Mills said.