|
 The
National Aviation Co of India (Nacil), which owns Air India and Indian, hopes
to cut down its aviation fuel costs by about 10 per cent in November. It will
accomplish this by opening its supply tender to a private supplier for the first
time. Refiner
Reliance Industries Ltd is expected to bid in Nacil''s air turbine fuel (ATF) mega-tender
this month for the very first time, thanks to its newly created supply facilities
at a number of Indian airports. So
far, jet fuel has been the monopoly of the three state-owned oil-marketing firms,
which priced the precious fluid about 65 per cent higher than international prices,
available at airports outside India. These companies use ATF margins to cushion
their subsidies on diesel, kerosene and cooking gas sales. But
ATF constitutes about 40 per cent of the operating cost for domestic carriers.
The fuel bill of Air India and Indian, for the last fiscal year alone, was a staggering
Rs6,500 crore ($1.6 billion). A
senior Nacil executive said that the presence of a private supplier would force
state-owned marketing companies to offer a better deal. The government has granted
marketing rights to companies such as Essar Oil, Shell India, and Mangalore Refinery
and Petrochemicals Ltd (MRPL), a subsidiary of the Oil and Natural Gas Corp (ONGC). However,
none of the companies could start supplying ATF as they were not allotted space
by the state-owned Airports Authority of India (AAI). Recently, Reliance has been
allotted land at 25 airports in India and is setting up aviation fuelling stations
at some of them. But the federation wants that the current ATF storage and supply
facilities be converted to common user facilities owned by a neutral agency instead
of duplication of infrastructure. If
ATF prices come down to global rates, operating profits can go up by up to 25
per cent for airlines. For example, an airline that posted an operating loss of
Rs120 crore for the quarter ended 31 December would have reported an operating
profit of Rs30 crore for the same period if the ATF charges were closer to international
levels.
|
