Kingfisher seeks clearance for direct import of jet fuel

New Delhi: Financially beleaguered private carrier, Kingfisher Airlines, has sought government permission to directly import jet fuel in a bid to improve its cash flow. Direct import of aviation turbine fuel (ATF) would help the carrier's financial position as it would source ATF through suppliers' credit on lower interest rates.

"...it is essential for us to improve our cash flow on an urgent basis. Sourcing of ATF (aviation turbine fuel) through imports has the potential to lower our overall procurement cost of ATF...bring down our cost of working capital as suppliers' credit at lower interest rates will be feasible," the carrier has informed the Directorate General of Foreign Trade (DGFT) in a communiqué.

According to sources, the carrier said in its communiqué that it would make arrangements with service providers for storage and handling of ATF at ports and pump it into aircraft at Delhi, Hyderabad and Bangalore airports.

It has also pointed out that ATF, which constitutes about 40 per cent of the total operating cost of an airline, attracts sales tax between four and 30 per cent in different states.

Apparently, the DGFT has sought details from the airline like the quantity and value of imports proposed to be imported directly.

Under current rules, only state trading enterprises like the IOC are allowed to import ATF. However, DGFT has powers to "grant authorisation to any other person to import any of these goods on grounds of genuine hardship".

Sources said the views of the petroleum and civil aviation ministries would be sought before the DGFT decided on the issue. Earlier in 2008, Kingfisher a similar request made to the DGFT by Kingfisher was turned down by the ministry of petroleum.