Pvt cos may get nod to sell ATF

NEW DELHI: Aviation turbine fuel (ATF) prices could come down sharply in the country as the government is planning to provide infrastructure to private companies to sell it in domestic airports.

Currently, public sector oil companies enjoy a virtual monopoly on selling ATF to airlines as only they have the right to set up oil dumps in airports.

While Reliance is the only domestic private sector ATF marketing company, international firms will also get the permission to sell the fuel to airlines directly. The government will provide them with land and other infrastructure facilities to set up shop at airports.

ATF prices in India are about 70% higher than international markets. The initiative will have a big impact on the bottomline of low-cost carriers, at present reeling under huge losses that have threatened the viability of many of them. Air Deccan’s losses in 15 months, for instance, have reached Rs 340 crore.

“The government’s proposal to promote private players to sell ATF will definitely increase competition. It will also lower our fuel bills which account for about 40% of our total costs at present,” said chairman & CEO of SpiceJet, Siddhanta Sharma.

At present, private companies are allowed to sell ATF in India, but do not have the requisite infrastructure at airports, which means that these firms cannot supply fuel to Indian carriers directly.

But the government is now planning to provide equal access to aviation supply system to the all-eligible suppliers of ATF. “Airport operators shall also establish common hydrant infrastructure, which will be made available to fuel suppliers on the basis of user charges,” said a government official. Private oil companies are naturally upbeat about the move. “We are keen on selling ATF in India as it is a very lucrative segment,” said a Reliance official. At present, Reliance sells jet fuel to public sector oil companies and also exports it.

The proposed guidelines allowing private companies shall be operational after the new civil aviation policy is approved, government sources said. Civil aviation minister Praful Patel has said a week ago that the new aviation policy will soon be sent to the Cabinet for approval.

Experts believe that with the present boom in the aviation sector, it is realistic to expect rationalisation of ATF prices and supply system. “With the increase in non-aeronautical revenues at Indian airports, it is realistic to expect reduction in ATF charges, which in India are 70% higher than international prices,” said Kapil Kaul, CEO, Indian subcontinent and middle east, Centre for Asia Pacific Aviation.

The civil aviation ministry is also trying to reduce costs by lowering fuel prices and rationalising taxes on ATF. Mr Patel has earlier said that he will ask the state government to reduce taxes on ATF.