Kingfisher Airlines has announced it will begin importing oil after receiving the green light from authorities, which should help keep the flight operator afloat. The struggling carrier has issued a statement today (April 19) saying that it has received “authorisation from the Director General of Foreign Trade for the import of aviation turbine fuel” and is taking steps to initiate imports.
While this will not completely eliminate all the woes of the cash-strapped carrier (see story here), it will help Kingfisher save fuel costs, which are extremely high in India because of state sales taxes that can add up to an additional 30 per cent. The duties make fuel 45 per cent of operating costs for Indian carriers, as opposed to the global average of 32 per cent. Importing oil directly means the airline can sidestep the need to obtain oil from state-owned companies and, therefore, reduce the tax burden.
However, much more than that will be needed to help the carrier, which is why Vijay Mallya, chairman of the UB Group that owns Kingfisher Airlines, is rooting for the foreign direct investment (FDI) liberalisation that would allow foreign carriers to inject capital into Indian airlines. The government is expected to make a decision on the new policy some time this week.
Allowing direct import of turbine fuel and FDI were proposed in India’s Union Budget 2012, released in March.
As reported earlier (see story here), there are several other aspects of the Indian aviation industry that need to be changed for it to meet its full potential. Tony Tyler, director general and chief executive of the International Air Transport Association (IATA) pointed to elements such as infrastructure and airport taxes, in addition to FDI restrictions and jet fuel prices, as factors that hinder the growth of the subcontinent's aviation sector.
For more information, visit www.flykingfisher.com
Alisha Haridasani
