Air India''s parent National Aviation Co of India''s ''open'' air turbine fuel tender may lead to lower prices

05 October 2007

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).