NEW DELHI: Seeking permission for direct import of jet fuel, Kingfisher Airlines has informed the government that steps are being taken to improve cash flow of the debt-ridden carrier by procuring 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 beleaguered airlines said in a letter to the Directorate General of Foreign Trade (DGFT).
It said that the ATF which constitutes for about 40 per cent of the total operating cost of an airline, attracts sales tax between four per cent and 30 per cent in different states. The airline would make arrangements with service providers for storage and handling of ATF at ports and into planes at Delhi, Hyderabad and Bangalore airports.
Sources said the DGFT has sought from the airline details like the quantity and value of imports proposed to be imported directly.
As per the Foreign Trade Policy, only state trading enterprises like IOC are allowed to import the ATF. However, DGFT has powers to "grant authorization to any other person to import any of these goods on grounds of genuine hardship".
Even in 2008, Kingfisher had made a similar request to the DGFT, which was declined by the Petroleum Ministry. Views of the Petroleum and Civil Aviation ministries would be sought before DGFT takes a decision on the issue, sources said.
Kingfisher reported a net loss of Rs 468.66 crore for the second quarter ended September 30. It has a debt of over Rs 6,000 crore.
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