Kingfisher's innovative arrangement to slash fuel costs will save Rs600 crore
03 Jul 2008
Bangalore/New Delhi: Desperately seeking relief from unrelenting price hikes at least one airline may have found a way out to cut fuel costs. UB group-owned Kingfisher Airlines says it intends to save at least Rs600 crore through a new arrangement which involves direct import of aviation turbine fuel (ATF) through oil companies.
The Bangalore-based airline said it will initiate this arrangement through Reliance Industries (RIL) over the coming two weeks.
According to airline officials, such direct imports will attract customs duty, but no sales tax, as it is not a 'sale.' They also said that that they hope to meet 60 per cent of their fuel requirement through this channel. In this arrangement the oil companies will act as handling agents and pump imported fuel on behalf of the airline at various locations.
Kingfisher officials said that the airline consumed roughly 700 tonnes of fuel, and import of the commodity would allow a savings of roughly Rs600 crore in the current financial year alone.