FIA
members forecast that the collective fuel bills for the sector
is likely to cross $700 million for the current month. Fuel
costs comprise 45% of the operating costs for airlines. Since
2005, ATF prices have increased by as much as six times, and
currently stands at Rs 57.93 a litre in Mumbai.
Sales
tax on jet fuel varies from state to state. It’s 29% in
Mumbai and 35% in Delhi. In other states, it’s anything
between 25%-35%. The sales tax is rationalised at 4% only in
Andhra Pradesh. The FIA now wants the sales tax on jet fuel to
be somewhere in the 10% range. Private carrier Jet Airways had
a fuel bill of approximately Rs 300 crore for April alone.
However, this is likely to go up by over 10% for the current
month. Meanwhile, A Raghunathan, chief financial officer at
Kingfisher Airlines told FE , "We can get the accurate
figures of our fuel bill increase only in the last week of
May. We are certainly expecting an increase of 12%-14%
compared to April."
GP
Gupta, chief financial officer at low cost carrier GoAir
explains, "Our fuel bill was Rs 30 crore in April. The
bill for this month will escalate by 10%. Going forward, if
the trend continues, the airlines will face a grim
situation."
Meanwhile,
analysts fear if the jet fuel costs continue to escalate, it
will make a dent in the profitability of the first quarter of
the current fiscal. "Also, the cost of available seat per
kilometer (ASKM) has gone up from 20 paise in the
corresponding month last year to Re 1 this month due to the
ever rising fuel cost."
However,
FIA has been drawing the government’s attention to ATF
prices being nearly 70% to 95% higher in India compared to
international prices in the case of fuel uplifted for domestic
operations. Even in the case of ATF bought for international
operations, Indian carriers pay 30% more.
So
