Airlines’ fuel import plans grounded

New Delhi, October 31: Domestic airlines are unlikely to get permission to import jet fuel for their flights as current suppliers — state-run Oil marketing companies (OMCs) — have rejected the request, saying that the imports would exacerbate the ATF surplus and lead to product handling problem.

However, siding with the airliners, the three OMCs have jointly recommended to the petroleum ministry that the sales tax on ATF could be rationalised to provide relief on ATF as the levy accounts for half the cost of running a flight.

“Instead of allowing airlines to import ATF, the possibility of making sales tax/VAT uniformally low in all states or pronouncing ATF as declared goods attracting sales tax/VAT at the rate of 4 per cent may be considered,” said IOC, speaking for the marketing troika of IOC, BPCL and HPCL.

It said that landed cost of imports was about the same as ATF produced by their refineries and the differences were mainly due to variations in applicable taxes, which are not applicable on supplies to international airlines.

Duties and taxes account for 40 per cent of ATF cost with sales tax alone responsible for inflating price by an average 26 per cent. This makes ATF in India 50 per cent costlier than global prices. Around 4.7 MT of jet fuel is sold annually and domestic airlines consume half of it.

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