Airlines may be allowed to import ATF under OGL route

24 May 2007

1
New Delhi: In a move, currently under consideration by the central government, domestic carriers may be allowed to import aviation turbine fuel (ATF) in bulk. According to civil aviation ministry officials, import may be allowed through the open general licence (OGL) route.

If implemented, this could result in the price of airfares coming down significantly, as the landed price of imported fuel would be 40% cheaper than the domestic price. This, according to airline sources, could lower the operational cost of an airline by almost 12%.

ATF prices in India are almost 70% higher than international prices, mainly because of heavy taxation. It also accounts for 40% of the total operational cost of domestic airlines.

In India, sales tax on ATF varies from 4% to 39%. Taxes apart, high margins of oil PSUs that range between 16% and 21%, according to industry sources, further add to the cost.

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